Asia-Pac dividends up further in Q1, but Singapore let down by Singtel

DIVIDEND payouts from the largest companies in Asia-Pacific have risen 8.1 per cent year-on-year to US$33.9 billion for the first quarter of 2022.

This marks the fourth consecutive quarter of growth, but the momentum masks mixed performances across the region’s key markets – which include Australia, Japan, Singapore, China and Hong Kong – according to a report from asset management firm Janus Henderson published on Tuesday (May 24).

Australia and India were the strongest contributors to growth in the first quarter – which is typically a quiet period for dividends in Asia. Singapore and Hong Kong, on the other hand, had lower payouts in Q1 2022 compared to a year earlier

The quarterly global dividend index report analyses dividends of the largest 1,200 companies by market capitalisation worldwide, which account for around 90 per cent of global dividends paid.

Australia companies paid some US$18.9 billion paid during Q1 2022, up from US$16.7 billion in the same period a year ago, helped by the performance of mining companies and banks.

Nearly 60 per cent of Australia’s Q1 dividend came from mining giant BHP alone, with some US$10.8 billion distributed to shareholders, the report noted.

“With another distribution planned for later in the year, BHP is likely to be the world’s largest payer in 2022 for the second year running.”

Singtel – which was the only Singapore company on the dividend index that paid a dividend in Q1 – saw a cut in the payout.

Sat Duhra, co-portfolio manager of the Asian Dividend Income strategy at Janus Henderson noted that Singapore’s telco sector has faced more competition, and has not been as attractive as markets such as South Korea or Indonesia.

But he noted that the return of roaming revenue and strength of Singtel’s associates offer reasons for optimism.

The big dividend payers in Singapore are real estate investment trusts (Reits) and banks, and Janus Henderson sees Singapore and Australia as stronger markets in the region.

While Reits in a rising rate environment are generally “not a great place to be across Asia”, Duhra said that there are attractive sectors within the region’s Reits, such as offices in Singapore and Sydney.

“These are two interesting areas, and this is where we have most of our exposure in terms of the Reits,” he said. “It's very important to have exposure where there's some kind of pricing power. And therefore, you can protect yourself in a rising rate environment.”

The immediate outlook for financials is “still quite good”, even though they are less attractive than they were 6 months ago, Duhra added.

While rising rates would mean stronger margins, he noted that there may be concerns over the level of credit costs and provisions if consumers get weaker.

“If corporates come under stress as well, then that's something that will probably not play in favour of the banks,” he said. “But I think, as they stand today, particularly in Singapore, banks – in terms of valuation, in terms of yield, and in terms of margin outlook – I think they're in a good spot right now.”

Meanwhile, Hong Kong company dividends “suffered from the effects of strict Covid-19 lockdowns”, the report said. Dividends from the country were down 11.4 per cent from a year earlier to US$2.5 billion.

“Property outlook, retail, even the banks because they have some exposure to China haven’t looked so good,” Duhra said, noting that they have been reducing weight in their portfolio there.

He added that Australia has been very different, with strength in employment indicating that consumers there are likely in better shape.

Apart from Australia, Duhra said that nearly every company which the portfolio owns in China “produced a good increase in dividends”. Many of these have already been announced, but they will only go ex-dividend towards the middle of 2022.

“By country we have witnessed positive dividend announcements in Australia, Taiwan and China in particular and expect this trend to continue across Asia as we move into a busy period for dividends in Q2 and Q3,” Duhra said.

Globally, first-quarter dividends jumped by 11 per cent to a total of US$302.5 billion, a record for the seasonally quieter first 3 months of the year. Accounting for the strong Q1 performance, Janus Henderson expects global dividends to reach US$1.54 trillion in 2022, up 4.6 per cent from 2021