High dividends, low growth? Inside the LTI strategies of the ASX 100

Key Takeaways

As of mid-2026, analysis of ASX 100 companies reveals an inverse relationship between high dividend yields and the inclusion of growth measures in Long-Term Incentive (LTI) plans.

• Of the ASX 100 companies that grant an LTI, 27% maintain a high dividend yield (above the dividend yield of the ASX100 Index).
• Companies heavily distributing capital are less likely to incentivise growth; of the companies with high dividend yields, only 10% include at least one growth measure as a performance hurdle.
• Sector variations are stark, with Industrials and Health Care heavily utilising growth measures (83.3% and 80% respectively), while Utilities and Energy implement zero growth measures in their LTI plans.

Remuneration committees must evaluate whether their current performance hurdles accurately align with their firm’s capital distribution strategy and shareholder expectations.

What is the relationship between dividend yield and LTI plan design?

In the ASX100, 47% of companies adopt at least one growth metric in the LTI.

However, a deeper analysis reveals a capital allocation trade-off. High dividend yields, defined as being above the dividend yield of the ASX 100 Index, are present in 27% of the ASX 100 companies that grant an LTI. Among these high-yield companies, the appetite for growth-linked incentives drops significantly, with only 10% incorporating a growth measure into their performance hurdles.

How does the adoption of growth measures vary across industry sectors?

Growth measures should be included when they help reflect industry dynamics and the capital needs specific to the sector. The Industrials and Health Care sectors are the most likely to incentivise growth, with 83.3% and 80% of companies respectively utilising growth measures.

As Figure 1 shows, companies with growth measures in incentive plans generally have lower median dividend yields. For instance, in Real Estate sector, those without a growth measure have a 2.36% higher median dividend yield. The same pattern appears in Financials, Consumer Staples, Consumer Discretionary, Communication Services, and Materials sectors.

Figure 1: Median dividend yield by sector for ASX 100 companies with vs without

Does company size affect the dividend yield-growth measure relationship?

This inverse relationship remains consistent regardless of company size. When analysing the ASX 100 by 3-month market capitalisation quartiles, companies with growth measures consistently record lower median dividend yields across all size brackets.

Figure 2 illustrates this consistent gap. Companies in the highest quartile without a growth measure have a median dividend yield that is 3.19% higher than those with one. In the lowest quartile, companies without a growth measure have a median dividend yield 1.47% higher. This data shows that every board, regardless of company size, must make a deliberate choice: prioritise immediate shareholder payouts or invest in long-term organisational growth.

What does this mean for boards?

Boards should ensure that executive remuneration is aligned with capital strategy, particularly where high dividend payouts may be at odds with growth-oriented LTI measures. Remuneration Committees should review their frameworks now to avoid inconsistencies with dividend policy and to strengthen support from proxy advisers and stakeholders ahead of the 2026–27 reporting season.