Australia Outpaces Global Peers on Size of Dividend Target Cuts
Australia Outpaces Global Peers on Size of Dividend Target Cuts
(Bloomberg) -- Australian dividend forecasts have been cut the most since 2009, exceeding similar moves across some of the world’s largest markets this year.
Payout estimates for the S&P/ASX 200 Index have been slashed more drastically than peers in the U.K., Japan and the U.S. in light of the coronavirus outbreak. Analysts have lowered dividend expectations for the next 12 months by 21% since the start of 2020, according to data compiled by Bloomberg.
Australia has one of the world’s highest dividend yields as companies returned to confidence in the wake of the global financial crisis and investors sought increased payouts, JPMorgan Chase & Co. analysts wrote in a April 27 note. This is likely to come under pressure as boards opt to hold capital amid an uncertain global economic outlook.
“This vulnerability is already evident in the degree to which dividends have been scaled back in the year-to-date versus other major markets,” the analysts wrote.
Dividend expectations have been whittled down as the pandemic crimps earnings and forces companies to lower or forgo payouts amid government-enforced shutdown measures and travel bans.
About 27 Australian firms have cut or deferred payments to shareholders since the start of the outbreak, led by the energy, industrial and financial sectors, JPMorgan said. National Australia Bank Ltd. earlier this week slashed its shareholder payment by two-thirds to 30 Australian cents, its lowest since 1993.
It could take more than three years for payouts to return to 2019 levels, largely because of the bleak outlook for banks and resources, UBS Group AG analyst Pieter Stoltz said on a conference call. Dividend forecasts have been lowered 25% from a year earlier, the biggest cut since a 29% reduction in 2009, according to data compiled by Bloomberg.
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