Record $36bn in dividends could help ASX share market recovery

Will all this money make its way back into the share market?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A wall of cash from dividend payouts is expected to give ASX share market bulls extra firepower to buy the dips.

That's the prediction of some market experts like Bell Potter strategist Richard Coppleson. He calculates that investors will reap more than $36 billion in dividends by April this year, according to reporting in the Australian Financial Review.

The collective value of dividends declared in the February reporting season was 40% higher than the same time last year.

Happy young man and woman throwing dividend cash into air in front of orange background.

Image source: Getty Images

Dividend windfall to support ASX share prices

"The dividends to be paid in March and April will be positive for retail sales and also the market, as some of this cash will be reinvested back into stocks in late March through to mid-April," Coppleson told the AFR.

"If we see the US market re-test its January lows, which is still a big chance, many institutional investors will have cash flying in from mid- to late-March that they will be able to throw at the market."

This month should see $26 billion in dividends hit shareholders' bank accounts. There is a further $10.3 billion that will flow into shareholders' pockets in April.

Cash to calm the volatility

If much of the cash is put back into the market, as Coppleson is predicting, it could help stabilise the S&P/ASX 200 Index (ASX: XJO) during this volatile period.

Russia's attack on Ukraine, rising interest rates, and fears of stagflation have sent ASX shares on a rollercoaster ride.

Most of the dividend support is coming from resources shares thanks to strong commodity prices.

Top dividend-paying ASX shares

BHP Group Ltd (ASX: BHP) is the reigning dividend champ with a record interim payout of US$1.50 (A$2.08) a share. BHP alone accounts for nearly 29% of the total value of dividend payments in the latest reporting season.

The next best dividend-payer, and the only non-resource ASX share in the top 5 dividend payers, is Commonwealth Bank of Australia (ASX: CBA). Australia's largest bank declared a $1.75 per share interim dividend. This totals $3 billion in dividends.

Fortescue Metals Group Limited (ASX: FMG) is in third spot despite cutting its interim dividend by 41%. Fortescue is paying out $2.6 billion. Rio Tinto Limited (ASX: RIO) is in fourth position with its $2.5 billion cash splash.

Woodside Petroleum Limited (ASX: WPL) rounds up the top five, forking out $1.4 billion in dividends.

Given the positive earnings outlook coming out of the February reporting season, plus the ongoing surge in commodity prices, the ASX dividend party may last a while longer yet.

Motley Fool contributor Brendon Lau owns BHP Billiton Limited, Commonwealth Bank of Australia, Fortescue Metals Group Limited, and Rio Tinto Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

Three business people join hands in strength and unity.
Dividend Investing

The reliable ASX dividend shares I'd buy with $10,000

Building passive income starts with the right foundations. Here are three ASX shares I would consider today.

Read more »

Smiling man holding Australian dollar notes, symbolising dividends.
Bank Shares

Here's the dividend forecast out to 2028 for NAB shares

Can NAB shareholders bank on dividend growth in the coming years?

Read more »

Woman smiling with her hands behind her back on her couch, symbolising passive income.
Dividend Investing

1 ASX dividend stock down 22% I'd buy right now

It could be a great time to invest in this leading business.

Read more »

Happy retirees celebrate with wine over lunch.
Dividend Investing

2 ASX dividend shares I'm betting on big-time to fund my retirement

I believe high-quality dividend stocks are worth their weight in gold.

Read more »

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Dividend Investing

2 of the best ASX dividend shares to buy in April

Analysts think these shares are among the best to buy now for income investors.

Read more »

Busy freeway and tollway at dusk
Dividend Investing

An ASX dividend stock I'd hold no matter what

For reliable income and resilience this $43 billion share is a true buy-and-hold.

Read more »

Man holding fifty Australian Dollar banknotes in his hands, symbolising dividends.
Dividend Investing

3 top ASX dividend share buys for passive income in April

These are my top picks for dividends right now.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Broker Notes

Are CBA shares still a good buy for passive income?

A leading analyst delivers his verdict on CBA’s passive income appeal.

Read more »