Time to get your dividend investing passport ready for 2027

Dan Pennell | Plato Investment Management

Market leadership has swung hard between sectors in recent years, from energy to technology and back again. Plenty is written about what that does to investment styles and fund returns. Far less is written about what it does to your income.

For Australian investors, it matters a lot because most income portfolios we look remarkably alike - the big four banks, a few miners and a generous serve of franking credits. That works brilliantly while those sectors lead. But leadership always rotates, and when it does, your income can take a hit. 

The miners showed us how - from 2022 until this August’s reporting season, falling commodity prices had them trimming payouts in what was a quiet dividend recession for anyone relying on them.

The banks carry the same risk. Around this time last year on Livewire, I argued that CBA’s stretched valuation was a signal to diversify into global banks.

Across 2023 and 2024, CBA (+67.7%) and the MSCI World Banks Index (+68.5% in AUD) were neck and neck. Then in 2025 the gap blew open: CBA returned 9.2%, while global banks returned 41.9%.

The 2026 August reporting season didn't change the picture. CBA's result looked fine in the rear-view mirror with profit up 7%, dividend up 4%. However, mortgage applications have fallen around 15% since the budget, with the other majors down 12% to 20%.

The growth outlook for the stocks anchoring most Australian income portfolios has deteriorated.

None of this is a knock on the ASX. It has served income investors well for decades, and franking makes a local dividend worth more than its headline yield. 

The problem is building an entire income portfolio around it and ending up concentrated in a handful of sectors, especially if leadership rotates away from them.

“The only investors who shouldn’t diversify are those who are right 100 percent of the time.” Sir John Templeton.

Growth doesn’t have to be at the expense of income in global equites

Many investors we meet rely on Australian shares for income and, if they invest globally at all, use a passive ETF purely for growth. That’s understandable when a global MSCI World ETF has paid just 1.1% over the past 12 months. But as we’ll show, a global equity income strategy opens the door to broader opportunities and potentially stronger long-term returns, without giving up income.

Take AI, the biggest market story of recent years. To own it, you need to go global. The ASX has very little technology, almost no semiconductors and few global consumer brands, which are precisely the industries where earnings, and increasingly dividends, are growing fastest.

Two of the biggest contributors to our fund’s outperformance over the past 12 months have been AI 'picks and shovels' plays Micron Technology and Lam Research, with no real equivalent listed on the ASX.

Micron Technology (+537%)

Micron makes memory chips that store and move data in everything from smartphones to AI data centres, including the high-bandwidth memory that sits alongside Nvidia’s AI processors. Surging AI demand has sold out its high-bandwidth memory supply and created a global memory shortage, sending prices, revenue and profits to record highs. The Plato Global Shares Income Fund clients have benefitted from significant returns by holding the position over the last 12 months.

Lam Research (+146%)

Lam makes the specialised equipment chipmakers use to etch and layer microscopic structures on silicon wafers. As memory and chip manufacturers race to expand and upgrade their factories for AI, Lam has captured that spending wave, delivering record revenue and margins. We have liked this name for some time, but increased Fund exposure in the first half of 2026, driven by the Plato stock selection model, has contributed to strong returns for our investors.

The benefits of being active in the global universe

Most investors assume they have to choose between growth and income, they don't, but the two often come from different corners of the world, and those corners keep moving. Having the flexibility to chase both is exactly why we believe income portfolios need actively managed global equities.

As we’ve seen, much of the recent growth came from the US. Income was a different story. In the June quarter, Europe was the world’s income engine. Rising defence budgets lifted payouts at defence companies such as Thales and BAE Systems, while higher interest rates and strong balance sheets powered the financials.

Financials generated around a third of developed-market dividend income that quarter, more than any other sector, as banks and insurers such as Allianz, AXA and UBS lifted their payouts. Many European financials trade on a fraction of CBA’s earnings multiple, and some yield 6% or more.

BNP Paribas, one of Europe’s largest banks with leading positions in retail, corporate and investment banking across the eurozone, offers a dividend yield of around 6.9%, and has lifted its payout 30% in the last 5 years, including a 25% increase in its latest interim dividend. It’s one of several European financials whose income has flowed through to our investors.

After a strong run from European financials, the income baton passed to the US. After all the major banks passed the Federal Reserve’s stress tests, several announced double-digit dividend increases, including Bank of America (+14%) and Morgan Stanley (+15%).

Global income outlook

The bigger picture is encouraging. Global dividends grew 9.2% in Q3 2026 compared with a year earlier, in local currency terms. 

Plato’s proprietary dividend-cut probability model sits below its long-term average, which suggests the risk to global dividends from here is low.

Source: Plato Investment Management

No single market consistently delivers both income and growth, and neither does an index fund. The MSCI World ex Australia has yielded just 1.6% a year since our fund’s inception. An index yield is an average across more than a thousand companies, most of which have no interest in sending you a cheque.

And the landscape shifts quickly. Tech companies have traditionally been growth stocks paying little or nothing. Now, booming profits have powered an 18% rise in IT sector dividends (Q3 2026), led by names such as Nvidia and Micron. Nvidia recently lifted its dividend 25-fold, yet it still yields just 0.47%. It’s a growth stock that has discovered dividends, not an income stock.

As Warren Buffett put it, “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Today’s small dividends from fast-growing companies can become tomorrow’s meaningful income.

In Australia, income usually costs you growth: the banks and miners pay well, with franking on top, but grow slowly. Across developed global markets right now, some of the fastest-growing companies are also the ones raising their payouts, even if they start from a low base.

Thinking differently about dividends for 2027

Pockets of high income exist all over the world if you know where to look. But delivering both growth and income takes a diversified, actively managed approach, because trends turn quickly. Even as I write, some of the recent tech winners discussed above have come under pressure, incidentally which we’ve reduced exposure to.

Harvesting global income is also a different sport from the ASX, where dividends bunch into two seasons. Global companies pay all year round, and many pay specials when cash builds up. Because we manage for tax-exempt investors (mostly pension-phase retirees, SMSFs and charities), we can rotate into companies about to pay, capture the dividend and the run-up into it, then move on. Throughout, we manage risk at the portfolio level, limiting macro exposures and choosing companies for both their income and their expected capital growth.

The result: 5.8% income a year, since inception in March 2016, from a benchmark yielding 1.6%, and a total return of 10.9% a year after fees to 30 September 2026.*

There’s one more souvenir worth remembering. When the Australian dollar falls, imported goods and overseas holidays get dearer, which is exactly when unhedged global shares are worth more in Australian dollars. It’s a natural hedge on a retiree’s cost of living.

September showed how it works. The dollar fell 3.1% against the greenback, so the MSCI World ex Australia Index fell 1.2% in US dollars but rose 1.8% for Australian investors. Unhedged global exposure tends to cushion your portfolio precisely when markets get nervous.

*Past performance doesn't reliably indicate future returns. Read the Fund's PDS and TMD available at this link. 

Learn how the industry leaders are navigating today's market every morning at 6am. Access Livewire Markets Today.

All prices and analysis at 27 October 2026.  This document was originally published in Livewire Markets on 27 October 2026. This information has been prepared by Plato Investment Management Limited (‘Plato’) (ABN 77 120 730 136, AFSL 504616) as the investment manager of the Plato Global Shares Income Fund – Active ETF (ASX:PGI2) (ARSN 608 130 838) (‘the Fund’). Pinnacle Fund Services Limited (‘PFSL’) (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.