News & Analysis

ASX’s market volatility stabilised with record setting dividends

21 March 2022 By Anthony Nguyen

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Investors in Australian-list companies will receive a wave of cash into their bank accounts over the following months. This will provide some much needed stability for the Australian Stock Exchange as investors celebrate the richest recorded interim reporting session in corporate history.

February’s earnings season had a record $36.3 billion in declared dividends. This is 40% higher than the same period last year ($25.8 billion) and 30% higher compared to 2020’s $27.5 billion. According to Commsec, the record dividend payout was due in large part to 88% of companies in the ASX200 index reporting a profit for the first half of 2022, the most in two years.

$26 billion will be paid out to investors this month, of which, roughly $4.3 billion of the dividends have already been paid over the past two weeks. The remaining $10.3 billion will be paid out in April. The dividends should help keep the ASX steady as they cautiously traverse the upcoming RBA’s decision to tighten policies to combat inflation as well as the volatility stemming from the conflict between Russia and Ukraine.

Breaking down the top five dividend-paying companies will highlight the resources sector’s performance as they provided four out of the five companies. Recent record commodity prices had propelled this success.

BHP sits at the top of the leaderboard with a record interim dividend of $1.50 USD per share. This would amount to $10.5 billion of fully franked returns. Fortescue is third with their announcement to payout $2.6 billion with 86 cents per share. Rio Tinto is forth with a payout of $2.5 billion with $4.79 per share. Woodside Petroleum took fifth place with their declared dividend of $1.05 US cent per share worth $1.4 billion.

Commonwealth Bank is the only non-resource company in the top five, sitting at second place with a declared interim dividend of $1.75 per share. This is a payout of $3 billion.

According to Hugh Dive, “the dividends declared were stronger than expected and were boosted by a solid reporting season”. He also believes that the market was expecting to see more of an impact from inflation and supply chain issues but those issues weren’t quite as bad as investors initially thought.

This record breaking performance is a continuation of last August’s historic earning season, during which, ASX-list companies paid out a record $38 billion in dividends throughout September and October.

As a result, Australian dividends had a record of $63.3 billion USD last year, this is the third largest total in the world after the USA and UK, according to Janus Henderson’s Global Dividend Index.

All in all, the Australian Stock Exchange has rebounded strongly from its 2020 pandemic riddled slump. Companies have gone from cutting down on dividends to setting records for paying out dividends.

If you would like to take this opportunity to invest in any of the ASX-listed companies above and don’t already have a trading account, you can register for a Shares or Shares CFD  account at GO Markets.

 

Source: Commsec, Janus Henderson, Bell Potter, AFR

 

 

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