ASX dividend investing has been a viable strategy for Aussies for years.
In fact, data from S&P Global shows Australia has historically been one of the highest-yielding equity markets in the world.
As of December 31, 2024, the trailing 12-month dividend yield of the S&P/ASX 300 Index (ASX: XKO) was 3.5%.
This outpaces Europe (3.2%), Canada (2.8%), and the US (1.8%).
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Slow drop off
Despite Australia offering historically high yields, the last few years have seen a shift.
In fact, the 3.5% trailing dividend at the end of 2024 is significantly lower than its long-term average of approximately 4.5% according to CommSec.
During the 10-year period between 2010 and 2019, close to 180 companies on average either maintained or increased dividends compared with the previous year.
However, since 2021, there has been a moderate decrease in the number of companies that have increased dividends.
As at the end of December 2024, 111 members of the ASX 300 Index pay fully franked dividends.
How does this translate to investor income?
According to CommSec estimates, major Aussie companies classified in the S&P/ASX 200 Index (ASX: XJO) will pay out around $32.1 billion in dividends in the first five months of 2025, down 5.6% from last year's $34 billion.
Which sectors pay the best dividends?
Unsurprisingly, throughout the past 10 years, between 64% and 78% of the total dividend payments in the ASX 300 Index have come from the financials and materials sectors.
A report from the ETF provider Betashares said as of the end of July 2025, 55% of all dividends paid out by the ASX 200 Index come from just ten companies.
This concentration means that while franked dividends are still available, they are increasingly reliant on a small group of stocks, many of which are mature and cyclical.
Dividend darlings not immune
According to Betashares, as earnings have been declining in parts of the Australian corporate sector, and company boards become more cautious given the uncertainty in the economy, there are arguably fewer companies that can afford to continue paying the high levels of fully franked dividends that investors have come to expect.
For example, BHP Group Ltd (ASX: BHP) recently declared a full-year dividend payout of US$1.10 per share.
The report from Betashares points out that while this is a fully franked figure, it is the lowest full-year payout since 2016/17 and follows a 26% decline in full-year profits.
Another example is Woolworths Group Ltd (ASX: WOW), which recently cut its final dividend by 21%.
Where to turn?
While this might all sound like doom and gloom, CommSec has helpful information on which sectors offer attractive yields.
It lists energy shares, utilities, financials, consumer staples, and materials as sectors that offer the best yields.
The Motley Fool is also always updating news and companies offering attractive yields here.
Furthermore, there are high-yield ASX ETFs that aim to provide investors with above-average dividend income.
Some options to consider include:
- Vanguard Australian Shares High Yield ETF (ASX: VHY)
- Betashares Australian Dividend Harvester Fund (ASX: HVST)
- iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD)
Foolish Takeaway
While Australia still offers some of the highest yields amongst global markets, it is more important than ever for investors to research what yields are on offer.
Investors should consider the history of a company's yields and pay attention to which direction this is trending.
