Global dividends on the rise, but the big payers are changing

By Plato Investment Management Senior Portfolio Manager, Dan Pannell 

While there’s been increased volatility in global equity markets recently, FY 2025 is expected to deliver strong global dividend growth, with new sectors emerging as dividend champions.

We recently published Plato’s latest Global Income Report. The report shows that despite some negativity surrounding equity income, global dividends are on the rise. Payouts from developed market equities hit A$807 billion in the second quarter of the 2024 calendar year.

This is a significant +6.3% increase when compared to the same period in 2023.

This recent growth in global dividends is a very positive signal for income-seeking investors. As we enter the new financial year here in Australia, we are confident global equity income will play a significant role in diversified income-generating investment portfolios over the coming 12 months.

Our analysis shows over the past quarter, 56.8% of dividend paying companies increased or initiated dividends when compared to the same quarter last year. The number of companies decreasing payouts remained relatively constant, at just 10.6%.

We continue to see large companies, for example Nestle, LVMH Moet Hennessy Louis Vuitton and Microsoft increase their dividends per share and distribute large dollar payouts.

In addition, some businesses that omitted dividends in the pandemic are now back to regular distributions. One example is HSBC Holdings, who in addition to the now regular dividend, paid a special dividend given the completed sale of their Canadian business to RBC.

However, investors need to be mindful of key shifts underway in global stock market sectors, impacting dividend payouts.

We’re beginning to see payouts under pressure from the dividend darlings of recent years in the energy and materials sectors reflecting weaknesses in commodity prices.

On the other hand, Communication services sector dividends have seen the most significant growth over the past quarter with dividends increasing +38%, we’ve also seen strong broad increases from Financials, the Consumer Discretionary, and IT sectors.

Communication services got a substantial boost from large businesses that initiated dividend payments in 2024 including Alphabet and Meta, reflecting strong company performance and solid balance sheets.

The disparity between yields from different sectors continues to demonstrate the importance of active management, and a strong risk management framework, for income-seeking investors.

Global equities can help diversify your income-generating portfolio

For investors wanting to build resilient income-generating portfolios, Plato Investment Management believes diversification is critical. Looking off-shore for dividends and gaining exposure to some of the world’s largest dividend paying companies can provide much-needed income diversity for Australian investors.

Disclaimer:

This document is prepared by Plato Investment Management Limited ABN 77 120 730 136, AFSL 504616 (‘Plato’). Pinnacle Funds Services Limited ABN 29 082 494 362, AFSL 238371 (‘PFSL’) is the product issuer of the Plato Australian Shares Income Fund (‘the Fund’). The Product Disclosure Statement (‘PDS’) of the Fund is available at https://plato.com.au/. Any potential investor should consider the relevant PDS before deciding whether to acquire, or continue to hold units in, a fund.

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