Australian Dividends Decline in Q3

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Commodities have driven Australian dividends lower in the past year, according to the Australian Shareholders’ Association (ASA).

According to a recent report, Australian dividends suffered in the third quarter of 2022, with underlying payouts declining by 13% and headline payouts falling by 21.3% year over year.

Australian dividends were $42.8 billion in the third quarter of 2022, a significant decrease from $54.3 billion in the same period last year due to fewer special dividends and a weaker Australian dollar.

According to the most recent Janus Henderson Global Dividend Index, the global mining dividend fall in Q3 of $30.1 billion was primarily responsible for the $11.5 billion decline in Australian payouts. This decline was also a result of the commodity cycle turning down.

Due to Australia’s lack of sector variety, the decline in dividends from the mining industry had an outsized impact on overall returns. Fortescue Metals, according to Janus Henderson, “fell due to its significant exposure to lower metals prices, while those with large coal operations, such as BHP, made smaller cuts.”

“The third quarter highlighted the impact of heightened volatility and the commodity cycle across global markets,” said Matt Gaden, head of Australia at Janus Henderson. “For Australian dividend investors, the fall in performance from mining companies and a lack of sector diversification in many portfolios meant a less-than-stellar Q3 dividend performance.”

A $44.9 billion improvement in Janus Henderson’s full-year headline figures has been made in response to the positive third quarter, primarily due to more significant one-time special dividends, growth in the oil industry, and gains in Asia. With inflation at 8.3%, Janus Henderson said it now anticipates $2.33 trillion in headline dividends.

“The surge in oil dividends has coincided with reductions from the miners, though payouts from the sector are nevertheless very high by comparison to history,” said Jane Shoemake, client portfolio manager for global equities income at Janus Henderson. “Like other commodities, energy prices are cyclical, and the oil price is already lower than levels reached earlier this year, so the current exceptional level of payouts is unlikely to be permanent.”

With commodities markets struggling to recover and the Australian dollar remaining low against major currencies, dividends are expected to decline in the short term, at least.

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