Finally, some good news for dividend-dependent Aussies

It was a rotten last year for Australia’s yield hunters, with the local market underperforming many global peers on payouts to investors. But there’s a little bit of hope on the horizon.

Aussie companies stung by the downturn in commodity prices trimmed their dividends in 2016. These cuts were responsible for almost the entire 10.1 percent on-year fall in payouts, the Henderson Global Investors Dividend Index shows.

The index, released today, shows that the $41 billion paid out by local companies last year was the lowest amount since 2010.

Australia’s 10.1 percent fall in dividend payouts compares to an increase of 0.1 percent across the global index; North American dividends rose 1.5 percent and European (excluding UK) dividends were up 4.3 percent, while the UK slumped 3.5 percent.

Those ‘headline’ numbers are calculated using a conversion into US dollars, but when currency movements, special dividends and other items are taken into account, Australia’s ‘underlying’ dividend payments shrank 12.2 percent.

The global level of underlying growth in payouts was 0.6 percent.

Henderson points out that a big cut in dividends from Woolworths and Woodside Petroleum – both slashed their payouts by more than 50 percent last year – were notable disappoints on the Australian dividend calendar,

The investment giant also notes that Aussies are highly dependent on the banking sector for their dividend income, with the banks accounting for more than half of the country’s total dividend payout a Commonwealth Bank of Australia alone paying out $1 of every $5 that’s distributed to local investors.

“This means that Australian dividends are more reliant on the payments from just a few large stocks than any other developed country,” Henderson says.

But Henderson sees some small upside for investors this year because the outlook for global economic growth is improved and commodity prices, including oil, are rising. It says growth in underlying Asia-Pacific dividends to at least stay at 2016 levels rather than shrinking further, while underlying global dividend growth is expected to come in at 3.2 percent.

Headline dividend growth, based on current exchange rates and the continued strength of the US dollar, is expected to come in at 0.3 percent.

Are you reliant on dividends for income? Do you invest mainly in Australian shares or more broadly? What have you done to make up for flat-lining or falling dividends?