If there has been a winner from the global energy shortage, it would have to be oil shares. Energy elites of the S&P/ASX 200 Index (ASX: XJO) have enjoyed enormous profits as conflicts crimp the supply of the commodity.
For shareholders, it has meant a plentiful year for dividends. According to Janus Henderson's latest Global Dividend Index report, the recent third quarter was a record for global payouts — rising 7% to $415.9 billion thanks largely to oil producers.
However, it begs the question: could the delectable dividends that are being injected into Australian portfolios from oil, gas, and energy companies pose a risk to future income? After all, the commoditised sector is known for its cyclical habits.
How much of ASX 200 dividends are from oil and gas?
In the third quarter of the calendar year, oil producer dividends surged 75% to a record $46.4 billion globally. This was a byproduct of elevated oil prices compared to the prior corresponding period, as shown below.
Locally, our biggest energy company increased its interim dividend by nearly four-fold to US$1.09 per share amid the amplified prices. As a result, Woodside Energy Group Ltd (ASX: WDS) became one of the top five dividend-payers on the ASX.
Sourcing data from S&P Market Intelligence, oil and gas companies constituted approximately 8% of the total $28.45 billion in Aussie payouts in Q3, the majority of which was delivered by Woodside.
The energy sector's contribution was bolstered by large cash drops from the likes of Santos Ltd (ASX: STO), APA Group (ASX: APA), and Ampol Ltd (ASX: ALD). In total, oil and gas companies served up more than $2.2 billion in divvies to shareholders.
Notably, one in five Australian companies sliced their dividends in the third quarter. Comparatively, only one in ten companies globally reduced their payouts.
Is it too much?
Many investors rely on the dividends from the ASX 200 via index-tracking passive exchange-traded funds (ETF). Any material changes to large contributors to the index could impact future income. So, could oil and gas payouts put a dent in your next payday?
The short answer is yes, but the more nuanced answer is: it depends… At around 8% of total ASX 200 dividends, oil and gas companies are far from the most important sector when it comes to income.
Instead, banks and mining companies are responsible for the majority of income generated by an investment in the index. At least that was the case in the third quarter.
According to S&P Global, banks made up roughly 21% of payouts. Meanwhile, mining companies took the number one spot in Q3 with 45% of all dividends delivered.
It would seem the risk of falling oil and gas dividends pose a minor risk to the total ASX 200 yield. The benchmark index remains heavily exposed to other areas of the market.
