Daniel Pennell

Plato Investment Management has projected strong dividend growth from global equities in FY 2025 with new sectors emerging as dividend champions.

Plato’s latest Global Income Report shows global dividend income is on the rise, with payouts from developed market equities hitting A$807 billion in the second quarter of the 2024 calendar year, a significant +6.3% increase when compared to the same period in 2023.

“This recent growth in global dividends is a very positive signal for income-seeking investors. As we enter the new financial year here in Australia, we are confident global equity income will play a significant role in diversified income-generating investment portfolios over the coming 12 months,” said Daniel Pennell, Portfolio Manager of the Plato Global Shares Income Fund.

“Our analysis shows over the past quarter, 56.8% of dividend paying companies increased or initiated dividends when compared to the same quarter last year. The number of companies decreasing payouts remained relatively constant, at just 10.6%.

“We continue to see large companies, for example Nestle, LVMH Moet Hennessy Louis Vuitton and Microsoft increase their dividends per share and distribute large dollar payouts.

“In addition, some businesses that omitted dividends in the pandemic are now back to regular distributions. One example is HSBC holdings, who in addition to the now regular dividend, paid a special dividend given the completed sale of their Canadian business to RBC.”

However, Pennell says investors need to be mindful of key shifts underway in global stock market sectors, impacting dividend payouts.

“We’re beginning to see payouts under pressure from the dividend darlings of recent years in the energy and materials sectors reflecting weaknesses in commodity prices.

“On the other hand, Communication services sector dividends have seen the most significant growth over the past quarter with dividends increasing +38%, we’ve also seen strong broad increases from Financials, the Consumer Discretionary, and IT sectors.

“Communication services got a substantial boost from large businesses that initiated dividend payments in 2024 including Alphabet and Meta, reflecting strong company performance and solid balance sheets.

“The disparity between yields from different sectors continues to demonstrate the importance of active management, and a strong risk management framework, for income-seeking investors.”

The Plato Global Shares Income Fund (Lonsec Recommended) has distributed almost 5.9% p.a. yield since inception, more than 4% p.a. above the index.

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