Dividends from Australian companies recovered strongly in 2021, according to a new report from Janus Henderson, with underlying growth of 68.5 per cent to a record $87.1 billion.
Australia recorded the third highest dividend payouts globally, behind the US and the UK, with much of the growth attributed to the rebound in dividends from banks and mining companies.
Twenty twenty-one was also a record year for global dividends, which rose by 14.7 per cent on an underlying basis to a total of $2.02 trillion.
“A large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world. But beneath these big numbers, there was broad based growth both geographically and by sector,” said Janus Henderson client portfolio manager on global equity income, Jane Shoemake.
A quarter of the $291 billion increase in annual dividends globally was from companies that resumed paying dividends that were paused in 2020 including banks, which paid out an additional $69.5 billion last year equivalent to a rise of 40 per cent.
“The effect was particularly pronounced in Australia, as banks finally returned dividends to investors after APRA relaxed dividend restrictions in 2021, accounting for a third of the nation’s headline increase in payouts last year,” the firm said.
Payouts from miners reached a record $132.9 billion, nearly double the previous record from 2019, and accounting for more than a quarter of the annual dividend increase globally on the back of higher commodity prices.
BHP was the biggest dividend payer of the year after delivering the largest ever mining dividend worth $17.2 billion.
“In the context of the dramatic rebound seen in the banking sector, and the exceptional cyclical surge from mining companies, it would be easy to overlook the encouraging growth seen from those sectors that have delivered consistent increases in recent years, like the technology sector,” noted Ms Shoemake.
Technology companies paid out an additional $23.4 billion in 2021, up 8 per cent, while growth was also recorded in consumer discretionary (12.8 per cent), industrials (10.0 per cent) and healthcare and pharmaceuticals (8.5 per cent).
Janus Henderson said that the most rapid growth in dividends worldwide had been seen in nations where cuts were the steepest in 2020, including Australia, Europe and the UK.
Collectively, Australia and the UK accounted for a third of last year’s global dividend rebound.
Looking ahead, Janus Henderson has forecast dividends will post another new record in 2022, reaching $2.09 trillion after underlying growth of 5.7 per cent.
“We expect many of the longer-term dividend growth trends witnessed since the index was launched in 2009 to reassert themselves in 2022 and beyond,” Ms Shoemake said.
“The big unknown for 2022 is what happens in the mining sector, but it is reasonable to assume that dividends here will be lower than the record levels achieved in 2021 given the significant correction in iron ore.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
