When it comes to dividend payouts Australian investors were massive underachievers in 2018 and the big banks were largely to blame, new research shows.

The amount of money doled out to shareholders surged to record highs globally in 2018, with further growth forecast for 2019, according to the Janus Henderson Global Dividend Index released on Monday.

Total dividends jumped 9.3 per cent in headline terms to $1.37 trillion in 2018, Janus Henderson found.

On an underlying basis, this was equivalent to an increase of 8.5 per cent – the best performance since 2015 – and above the long-term trend of 5 to 7 per cent.

Almost nine in 10 companies around the world raised their payouts to investors or held them steady.

Emerging markets Japan and North America performed strongly, while Europe lagged behind. Thirteen countries delivered record payouts, including Japan, the US, Canada, Germany and Russia.

Australia a ‘real weak spot’

Australia was one of the world’s worst performers in terms of dividend payouts to shareholders last year.

A “real weak spot” in the Asian region, Australian dividends rose just 0.9 per cent year on year, Janus Henderson found.

While mining companies “saw decent dividend growth, dividend growth at the banks was dull”, Janus Henderson investment director Jane Shoemake said.

“Australian banks account for almost half the country’s total dividends and weak profitability, combined with already high payout ratios, so it is difficult for them to increase their dividends,” she said.

“In addition, Telstra cut the total paid to shareholders by $US1.3 billion, in a bid to preserve cash and protect its balance sheet, while QBE Insurance also made a steep cut following poor results.”

While the banking royal commission may have hurt the big banks in 2018, the outlook appears to have improved following the release of Commissioner Kenneth Hayne’s final report.

“The inquiry made a number of recommendations in the final report, but did not suggest the financial sector needed to instigate any break-ups or implement tighter lending rules that threatened to crush profits and spark an economically damaging credit freeze,” Ms Shoemake said.

“Investors have taken this well with bank share prices moving sharply higher. The government is due to take action on all 76 FSRC recommendations, but the industry has already started to reshape itself.

“We do not anticipate the outlook for Australian bank profitability, earnings or dividends to change dramatically.”

What to expect in 2019

2019 has been billed as one of global economic and political uncertainty, and Australia’s economy may be vulnerable to international turbulence.

“Current consensus economic forecasts estimate GDP growth of around 2.7 per cent for both 2019 and 2020, but this may be subject to downward revision given the extended point in the cycle and slowing Chinese global growth,” Ms Shoemake said.

Corporate profit expectations have also fallen as economic forecasts have been revised down across the world.

At a global level, Janus Henderson forecast dividend growth of about 5 per cent for 2019.

However, some reasons for investor optimism remain.

“We still expect companies to deliver positive earnings growth in 2019 which will be supportive of dividends,” Ms Shoemake said.

“Dividends in any case are much less volatile than earnings, so we remain optimistic on the prospects for income investors.”