According to Dr Don Hamson, managing director at Plato Investment Management, while some sectors have been completely closed off, investors should still see solid dividend returns.

“While various unknowns remain in this rapidly evolving environment, our current expectation when taking into account all the information currently available on the COVID-19 pandemic is an overall 30 per cent dividend cut across Australian equities over the next 12 months, based on information available at 31 March 2020,” Dr Hamson explained. 

Dr Hamson believes when adjusting for likely dividend cuts, Australian investors should expect a gross yield including franking from Australian equities over the next 12 months of around 5 per cent, which is still 3 per cent higher than a savings account.

Instead of being marketwide, the dividend cuts will be very stock- and sector-specific, and dividend traps are about to become a lot more prevalent. 

“We believe iron ore miners are at the lower end of the dividend cut risk spectrum. Expected stimulus from China will require iron ore, and there’s been supply issues in India and Africa, which have supported prices.” 

“Telcos and consumer staples should also be able to avoid major dividend cuts.

“Significant dividend cuts are likely from the banking sector, and it is our belief that smaller banks will be hurt more than larger banks, due to thinner margins and narrower funding avenues. 

“We also expect dividends from miners without exposure to iron ore to be hit, along with the consumer discretionary, energy and REITs sectors, particularly retail REITs,” Dr Hamson concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

Stock market

Russell rebalance reshapes investment landscape amid SpaceX IPO buzz

As the world eagerly anticipates SpaceX's historic initial public offering today, a significant shift is quietly occurring in the financial markets, one that could have profound implications for both ...Read more

Stock market

Franklin Templeton expands active ETF suite with new global equity and income strategies

In a strategic move to broaden its investment offerings, Franklin Templeton has announced the launch of two new active exchange-traded funds (ETFs) on the Australian Securities Exchange (ASX)Read more

Stock market

ASX companies make strides amidst federal budget chatter

In a week dominated by discussions surrounding the recently released FY27 federal budget, the financial landscape witnessed significant activity, particularly among ASX-listed companiesRead more

Stock market

ASX small caps report mixed results amid market optimism

The latest flurry of quarterly activities reports from ASX-listed small cap companies has provided a snapshot of the diverse and dynamic landscape of Australia's financial market. As April came to a ...Read more

Stock market

Adisyn Limited and Brazilian Critical Minerals make significant strides in their respective sectors

In a landscape where Australia's Information Technology sector often plays second fiddle to global giants, Adisyn Limited (ASX: AI1) is making waves with its innovative advancements in graphene ...Read more

Stock market

Australia's ASX 200 Energy Index surges amid Iran conflict

Australia's ASX 200 Energy Index has surged nearly 20% since the onset of the Iran conflict, marking its highest level in three months. This development positions Australia as the only developed ...Read more

Stock market

Webull launches Webull Connect, revolutionising access for Australian financial advisers

In a significant move that marks its entry into the Australian wealth management sector, Webull Securities (Australia) Pty Ltd, a subsidiary of the Nasdaq-listed Webull Corporation, has unveiled its ...Read more

Stock market

Future Generation Global boosts dividends with special payout, marking significant yield increase

Future Generation Global (ASX: FGG) has announced a significant boost to its dividend offerings for the year 2025, delighting shareholders with an increased fully franked full-year dividend and an ...Read more