The Henderson Global Dividend Index found that total dividend payouts for 2016 in Australia were US$41.8 billion, down 10.1 per cent on the previous year.
The mining sector accounted for almost the entire decline, with dividend payouts down US$4.5 billion year-on-year. After adjusting for the stronger Australian dollar, the underlying fall in the total market was 12.2 per cent, said the report.
Big dividend cuts from "troubled retailer" Woolworths and oil producer Woodside Petroleum contributed to the fall, said Henderson.
"Together the banks account for half of the country's total dividends, while CBA alone is responsible for $1 in every $5 distributed," said the report.
"That means that Australian dividends are more reliant on the payouts from just a few large stocks than any other developed country."
Global dividends bucked the trend in Australia, rising marginally by 0.1 per cent to reach US$1.154 trillion.
US dividend growth slowed to rise 1.5 per cent to US$412.5 billion as lower special dividends took their toll, said the report.