Ausbil's five sectors for dividend growth in 2023 (and Materials isn't one of them)

The Morning Wrap

Livewire Markets

MARKETS WRAP

Source: Investing.com

S&P 500 TECHNICALS

Source: Yahoo Finance

THE CALENDAR

Source: Forex Factory

While it might be Eurozone CPI night tonight, all eyes will be on GDP partials and the monthly inflation indicator from the Australian Bureau of Statistics at 11:30 am locally. The big question: how much has inflation continued to rise or has it started to turn some kind of corner? And how much has the rise in inflation generally eaten away at our economic growth prospects for 2022 and 2023? 

THE CHART

History just repeats itself. Spectacularly. (Source: Tilo Maritz/Continentale Versicherungsverbund)

Life just repeats itself in this chart of the day. The 2022 correction has had an extremely close correlation with 2008 so far, but it's the captions that make it really interesting. What will be this market's Lehman Moment? That is, the tipping point where markets will continue to fall with no dip to buy from here on in.

THE QUOTE

"The recession we have been anticipating for nine months draws nearer. Our expectation for a recession in the US by mid-2023 has strengthened on the back of developments since early last spring."

Deutsche Bank was the first of the major Wall Street firms to call for a US recession in the near future. And in its 2023 outlook, they are pulling no punches. The effect in equity markets will be steep as well as they expect declines of as much as 25% from today's levels. The one bit of good news in this projection is that the recovery could also come quickly if the recession doesn't play out for as many quarters as they expect.

And if the major central banks' missions to crush inflation work, then the next bull market could also be a long one.

DIVIDENDS IN FOCUS

Speaking of 2023 outlooks, Ausbil released its 2023 investment outlook for the ASX yesterday. Michael Price, portfolio manager of the Ausbil Active Dividend Income fund, points out that next year will be flat for dividend growth given the resources sector has probably paid out the peak of its payouts in this cycle.

But that doesn't mean there aren't opportunities in other sectors:

"Some ‘all-weather’ dividend payers in the telco and healthcare sectors, and also in consumer staples, are expected to deliver better-than-market dividend outcomes," Price said. 
"We are also expecting a strong dividend year in quality energy
companies given the elevated prices and the current supply shock we are experiencing.
"We are also expecting strong dividend performance in select real estate investment trusts (REITs) that have global logistics and warehousing businesses, and some local REITs with near fully leased commercial portfolios that have lease profiles that pass inflation on to tenants through ratchet clauses." 

Hans Lee wrote today's report.

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The Morning Wrap
Markets Wrap
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Australia's most comprehensive markets wrap is back for 2023, with a fresh look and a new emphasis on getting you and your money ahead of the curve. Available each weekday morning at 8:30am AEDT. Written by Chris Conway, Kerry Sun, and Hans Lee.

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