ASX-listed companies continued to hold off paying dividends, extending a five-year long trend, a global index shows.
According to Janus Henderson, dividend payouts rose 5.7% in the June quarter, thanks mainly to QBE Insurance, which rewarded shareholders on the back of rebounding profits.
Ben Lofthouse, head of global equity income at Janus Henderson, said in Australia the seasonality of payouts, overreliance on financials and resources and lack of dividend growth reiterates the benefits of a global approach to secure income. Major bank Westpac kept its dividend flat for the eighth consecutive quarter.
Pointing to Westpac's 3Q19 capital update, UBS highlighted the banking group will likely offer a discount on its dividend reinvestment plan.
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A dividend cut to 84 cents per share is also expected to be announced in the first half of 2020 as a result of ultra-low rates putting pressure on earnings, subdued revenue, remediation and credit charges bouncing off lows, UBS said in a banking sector note.
Further, UBS forecasted an ongoing trend of regulators not backing down from proposing changes to capital, remediation and responsible lending.
"We remain cautious on the banks given ultra-low rates and stretched multiples. We expect CBA and WBC to join ANZ and NAB in cutting dividends should rates continue to fall," the note said.
Globally, total dividends paid to shareholders broke a new record of $513.8 billion in the second quarter, according to Janus Henderson's index, despite the world economy decelerating.
In the US, public companies paid dividends at their slowest pace in two years, up 5.3% on an underlying basis to $121.7 billion.
Four-fifths of companies raised dividend payouts, keeping the US near the top of the international rankings.
The banking sector continued to show strong dividend growth, but auto manufacturers all held their payouts flat, reflecting growing global structural challenges for the sector, Lofthouse said.