Home / News / What will the corporate dividends look like in 2022-23?

What will the corporate dividends look like in 2022-23?

News

With Australian share market consensus expectations at around a 5 per cent rise over the remainder of 2022, companies won’t receive the same type of pandemic-related stimulus boost that was delivered in 2021.

In saying that, government support will likely remain together with relatively low interest rates over the year. For Australian investors, the value of fully franked dividends will play a bigger part in client portfolios as dividend payments return to pre-pandemic levels. But that all depends on whether Australia has a soft or hard landing.

Portfolio manager of the Ausbil Active Dividend Income Fund, Michael Price, says “corporate dividend payments are back to where they were before the pandemic and the next reporting period should be good for dividend income.”

  • Ausbil expects a 15 per cent increase in dividend payments for the entire Australian share market in the 2022-23 financial year compared to the previous year; although the firm says the exact growth will depend on whether there is a ‘soft’ or ‘hard’ landing with rising interest rates.

    “For the 2023-24 year, we expect a 5 per cent increase in dividend income for the market. Today, just seven companies account for over half (52 per cent) of dividend payments in the Australian market. These include the big four banks and three iron ore miners.”

    The big four banks and the iron ore miners have also been the most resilient during the recent market downturn. According to Price, “The iron ore miners currently pay more dividends than the big banks and we believe it is as good as it gets for them in terms of dividend payments, while the level of bank dividends should be able to be maintained longer-term. Telstra also continues to provide a good source of regular dividends.”

    CompanyDividend YieldDPS
    FMGFortescue Metals Group17.17%358.00c
    RIORio Tinto14.60%1422.90c
    BHPBHP Billiton12.23%402.66c
    ANZANZ6.34%142.00c
    WBCWestpac6.07%118.00c
    NABNAB4.98%127.00c
    CBACommonwealth Bank4.05%350.00c
    TLSTelstra4.15%16

    In 2021, the Australian share market (S&P/ASX All Ords Accumulation index) rose by 17.7 per cent, after a near 4 per cent gain in 2020. Price says the silver lining is to capture both income return and a capital gain, equating to a solid total return at the end of the financial year. “Companies need pricing power to be able to grow their earnings and pay dividends and we see general insurers as having the most potential for special dividends.”

    Price concludes by saying, “It is important for income investors to consider a more active approach, capturing dividends from a range of companies rather than buy-and-hold. Overall income and capital gain is more important than just passive income.”




    Print Article

    Related
    ASIC levy review targets adviser ‘time-lag’ issue

    The review will consider “the consequences of time lags between regulatory action and cost allocation”, the terms of reference states.

    Tahn Sharpe | 10th Aug 2022 | More
    August reporting season has profit margins and managing expectations in focus

    An action-packed month of record dividends, soaring energy prices and rising inflation are all expected to be key trends this earnings season.

    Ishan Dan | 10th Aug 2022 | More
    ‘Volatility provides opportunities for income investors: Franklin Templeton

    Following two years of volatility, triggered by a global pandemic, supply-chain disruptions and the release of massive stimulus that followed, the financial system is in uncharted territory. Inflation is at highs not seen in four decades; bonds have fallen with equities, invalidating the traditional 60/40 portfolio; and, to add a spanner in the works, a…

    Ishan Dan | 5th Aug 2022 | More
    Popular
    1
    Is The Lottery Corp (ASX: TLC) the best ASX dividend share?
    Lachlan Buur-Jensen | 3rd Jun 2022 | More
    2
    Australian housing set to tank like New Zealand
    Ishan Dan | 13th Jul 2022 | More
    3
    Which stocks made the cut for the “recession-proof” portfolio?
    Ishan Dan | 1st Jul 2022 | More
    4
    Your guide to the ANZ, Suncorp deal and capital raising
    Lachlan Buur-Jensen | 22nd Jul 2022 | More
    5
    Hydrogen and its role in Australia
    Ishan Dan | 18th Feb 2022 | More