Australia’s long-running dividend downturn may be reversing, with ASX-listed companies expected to distribute almost $40 billion in dividends across September and October. Around $28 billion is expected in September and another $10 billion in October. Total dividends for the latest financial year have reached approximately $105.9 billion, the third-highest level on record, reversing three consecutive years of declines.
The resources sector has been a major catalyst for the turnaround. Following the post-COVID commodity boom, falling iron ore and other commodity prices caused dividends from major miners to decline sharply. The latest reporting season, however, points to a recovery, with BHP substantially increasing its dividend and Rio Tinto also delivering a significant increase. Lithium producers including Mineral Resources, IGO and Pilbara Minerals have also returned to paying dividends.
The improvement has been relatively broad across large-cap companies. Plato Investment Management reported that dividends across its large-cap universe increased 13% year-on-year, with 66% of companies increasing their dividends compared with just 24% reducing them. This suggests that the recovery is not solely dependent on a handful of companies and reflects a broader improvement in earnings and cash flows.
However, a stronger dividend cycle does not necessarily mean a permanent income boom. Australia’s overall dividend pool remains heavily concentrated among banks and resource companies, leaving aggregate payouts sensitive to commodity prices, bank profitability and domestic economic conditions. Investors therefore need to focus on the sustainability of dividends, rather than simply the headline yield.
