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

An older couple use a calculator to work out what money they have to spend.
Dividend Investing

100,720 shares of this high-yield ASX dividend stock pay income equal to the Age Pension

Generating a full income from dividends sounds appealing, but how much do you actually need?

Read more »

Australian dollar notes in businessman pocket suit, symbolising ex dividend day.
Dividend Investing

2 ASX shares with dividend yields above 7%

Large yields could be very appealing right now.

Read more »

A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.
Dividend Investing

1 ASX dividend stock down 50% I'd buy

This ASX dividend stock has been under pressure. But looking ahead, there are signs the story could be starting to…

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Share Market News

How much do I need to invest in ASX shares to earn a $500 monthly passive income?

A $500 per month passive income is more achievable than you'd think.

Read more »

Growth of ASX share price represented by tiny beans stalk shooting up into the sky
Dividend Investing

3 ASX dividend shares I'd hold through anything

This trio has scale, resilience, and cash flow to endure market cycles.

Read more »

Two players on a field pump their fists in the air, indicating two of the best
Dividend Investing

Bell Potter names the best ASX dividend shares to buy

The broker has named these shares as best buys this month.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Down 40%: These high-yield ASX dividend shares are rated as buys

Brokers expect these buy-rated shares to offer 6% to 11% dividend yields.

Read more »

A young bearded man wearing a white t-shirt with a yellow backdrop holds up his arms to his chest and points to the camera in celebration of ASX shares rising today
Dividend Investing

1 ASX dividend stock up 20% that I'd hold through any market

I think this classic defensive ASX dividend company is a no-brainer buy and long-term hold.

Read more »