Australian dividend distributions rebound in Q3

Australia saw a significant rebound in dividend distributions in the quarter to September 30, with the recovery attributable to BHP and the broader mining sector.

Capital Group's latest Dividend Watch highlighted the core dividend growth in Asia Pacific (excluding Japan, China and Hong Kong) surged by 13.3% in the period, second to only Japan (15.7%), with Australia "recovering strongly".

Australian dividends were among the strongest globally, with core growth of 14.8%, representing the third-fastest rate among major markets, Capital Group said.

Mining accounted for around 80% of the increase, almost all of it from BHP, with the group benefiting from record iron ore production, strong copper output and higher copper prices. The positive performance lifted underlying EBITDA to around $47 billion (US$33bn).

Median dividend growth was 7.5%, ahead of the global figure, pointing to solid increases across the wider market, Capital Group said. However, Australian banks have lagged due to increasing interest rates and cooled mortgage demand.

Meanwhile, Taiwan was the only major market in the index to set a new third-quarter record, with high double-digit growth across the sector led by TSMC and Hon Hai.

In all, both economies contributed 82% of the regional increase in the quarter, followed by Singapore from strong bank distributions and South Korea from banks and industrials.

The stronger-than-expected third quarter prompted Capital Group to upgrade its 2026 global dividend forecast to $3.2 trillion (US$2.2tn), with both headline and core growth now expected at 6.8%, up from 6.4% and 6% respectively three months ago.

Commenting, Capital Group head of product, Europe and Asia Pacific Alexandra Haggard said active managers can identify companies best positioned to convert this performance into sustainable dividend growth.

"Our Q3 equity market analysis shows few signs of a meaningful near-term slowdown. AI continues as an important driver of growth and increasingly one that extends beyond the technology sector," he said.

"The resulting investment cycle is fuelling demand across the wider industrial economy, while the improving profitability across materials, financials, industrials and parts of healthcare is providing a broader base for dividend growth.

"Risks remain, including elevated energy costs, trade tensions and divergent monetary policy, but the underlying backdrop remains healthy, supported by strong cash generation and generally robust balance sheets."