Australia’s decrease in dividends speaks to the country’s overly concentrated market structure, a market note has highlighted.
While global dividends grew to a record US$1.75 trillion in 2024 – up 6.6 per cent on an underlying basis – Australia bucked the trend with a 6.4 per cent drop.
According to new analysis from Janus Henderson, global headline growth of 5.2 per cent reflected one-off special dividends and a stronger US dollar.
However, for Australia, total payouts declined to US$56.6 billion in 2024, on the back of significant dividend cuts from key companies in the mining and banking sectors. Namely, Woodside, BHP, and ANZ Bank reduced their payouts in response to weaker profits, cost pressures, and economic uncertainty.
Despite this, three-quarters of local companies maintained or grew their dividends; however, the country’s concentrated market structure meant overall growth trailed behind global markets.
According to Janus Henderson, this disparity highlighted the importance of diversification for investors looking to maintain stable income streams and capture broader opportunities outside of Australia’s resource-heavy economy.
“Australia has long been known as a strong dividend market, but history has shown that over-reliance on a few key sectors can leave investors exposed to risks they may not anticipate,” Matt Gaden, head of Australia at Janus Henderson Investors, said.
“Investors who fail to look beyond domestic opportunities often miss out on the resilience and growth potential that global markets provide.”
According to Gaden, those who expand their investment horizons can gain exposure to businesses with sustainable competitive advantages across a diverse range of industries.
“In a world where change is the only constant, the ability to adapt and diversify is one of the most powerful lessons history has taught us,” Gaden said.
Global outlook remains bright
Looking forward, Janus Henderson expects dividends to grow by 5 per cent globally on a headline basis in 2025, bringing total payouts to a record US$1.83 trillion.
And with the dollar strengthening against many currencies, which slows the headline growth rate, the firm said that underlying growth is likely to be closer to 5.1 per cent for the year.
Over 2024, growth was strong in Europe, the US, and Japan, Janus Henderson said, with some key emerging markets, such as India and parts of Asia, also registering decent growth.
Overall, 17 countries out of the 49 in the index saw record dividends, including some of the largest payers such as the US, Canada, France, Japan, and China.
“Large companies making their first dividend payments made a disproportionate impact,” the analysis found.
“The biggest of these came from Meta and Alphabet in the US, and Alibaba in China. Between them they distributed US$15.1 billion, and accounted for 1.3 percentage points, or one fifth, of 2024’s global dividend growth.”
Turning to sectoral performance, almost half the growth in 2024’s dividends came from financials, particularly the banks, whose dividends rose 12.5 per cent on an underlying basis.
The media sector, meanwhile, doubled on an underlying basis helped by Meta and Alphabet’s payments.
Janus Henderson said that this growth was very broadly based.
“Telecoms, construction, insurance, consumer durables, and leisure all saw double-digit increases. The weakest sectors were mining and transport, which between them paid out US$26 billion less year-on-year,” it said.
Globally, 88 per cent of companies raised dividends or held them steady and the median increase companies made was 6.7 per cent.
