Leanne Pan
Australian dividends are proving their worth as a consistent driver of returns, and can play a role during the current ‘poly crisis’ impacting the world economy and markets, according to a dividends investing expert.
Australian dividend stocks are not always fashionable but remain a powerful strategy, according to Leanne Pan, Portfolio Manager for the Prime Value Equity Income (Imputation) Fund. “Dividends will continue to be the relatively stable component of the equity return in this current poly crisis environment.
“Historically, dividends have contributed significantly to total ASX returns across many cycles. Hence there should always be some dividends in a portfolio.
“But investors need to look beyond the dividend yield alone and consider a total return approach combining both dividend yield and capital growth, to avoid dividend traps.
“Dividends can be financially engineered, so investors need to understand the true drivers of a business, what underpins the dividend and whether it is sustainable.”
Ms Pan said Australian dividend stocks have recently benefitted from the ‘Halo’ trade, where investors have targeted ‘heavy asset, low obsolescence’ stocks, many of which also pay reasonable dividends, due to concerns about software companies being negatively impacted by AI.
“Dividend stocks have been well positioned for this rotation into more mature companies with hard assets, because software companies are not a strong sector for dividend returns.
“But we’re most concerned with the medium-to-long-term, so rather than chase a theme we’re holding a balanced portfolio and seeking out companies with sustainable dividend and medium-term capital growth.”
The recent ASX reporting season also suggested some good news for dividend investors, according to Ms Pan: “The overall impression from reporting was that companies are doing reasonably well, resulting in earnings upgrades going forward.
“The major banks’ strong update numbers surprised the market showing good revenue and no big issues with debts. Of course, in the near term this positive sentiment needs to be reassessed as the Middle East situation unfolds.”
The Prime Value Equity Income (Imputation) Fund has returned a 10.4% per annum net of fees since inception in 2001 to 28 February 2026 – this increases to 12.5% per annum net of fees when franking credits are included. The Fund has delivered a 25.1% per annum return net of fees for the 12 months to 28 February 2026, increasing to 26.7% per annum with franking credits.
Prime Value Asset Management was founded in 1998 and is part of an investment group including Shakespeare Property Group, managing circa $3 billion in equities, income securities, direct property and alternative assets.