ASX companies paying dividends have helped many Aussie investors build wealth for their retirements. Or in some cases, provided extra passive income for travel and leisure activities.
Indeed, the Aussie share market is a good one to go hunting for income stocks.
The first quarter of calendar year 2023 saw ASX shares deliver a whopping $28.3 billion in dividends, according to data from Janus Henderson. And a lot of that passive income will have come with franking credits.
But after more than a year of elevated inflation and rising interest rates, many households and companies are starting to feel the cost of living and cost of business pinch.
Does that mean we can expect to see our ASX dividends cut this reporting season?
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What's the outlook for ASX dividends?
For some insight into what investors might expect from their ASX dividend shares when they report their results, we defer to Jun Bei Liu, portfolio manager at Tribeca Investment Partners, and Andrew Tang, co-head of investment at Morgans (courtesy of ABC News).
Liu is forecasting a potential dip in ASX dividends, but nothing overly concerning.
"If you look at Australia, our big dividend payers are the banks and resources companies, and I think our dividends will be reasonably okay," she said. "They might be a little bit down because commodity prices have softened somewhat compared to last year."
On the positive side of the ledger, ASX bank shares could be an area of strength for dividends this reporting season.
According to Liu:
Our banks are very well capitalised and very profitable. Although the economy is slowing down, the credit environment is still very strong for the banks. So, if anything, the banks will look to either buy back shares or to pay out a special dividend in the next six months.
Tang is forecasting a potentially more significant reduction in ASX dividends.
"I worry that a lot of investors may be disappointed by the dividends they'll receive in August," he said.
"With a challenging economic climate, rising interest rates, rising inflation, I think boards are going to be a lot more conservative with their dividend payout ratio," he said.
And Tang is not too optimistic on the short-term dividend outlook from the banks.
"For example, we think Commonwealth Bank of Australia (ASX: CBA) will take a more conservative approach and pay at the low end of its payout ratio," he said.
Though Tang flagged some potential modest growth in ASX dividends ahead.
"But moving forward, we think dividends will either be flat, or grow ever so slightly," Tang added.
