Dividends bonanza
Investors keen to tuck into slice of $26b pie
BACK up the truck – it’s dividend payout season and there’s a slice of a $26 billion pie that should have your name on it.
That’s the amount set to be paid out to shareholders and into superannuation funds over the coming months as the cream of corporate Australia spreads the love following a solid, if unspectacular reporting season.
Investors typically buy stocks for two reasons: capital growth and dividends.
While they’re enjoying limited success on the first of those motivations – the benchmark ASX 200 index has risen just 0.4 per cent this year – the dividend yield hunters are sitting pretty, for now.
According to stockbroker CommSec, 91 per cent of companies that have just reported their full-year earnings results issued a dividend. Of those, 83 per cent maintained or lifted payouts.
A bumper $20 billion in dividends will be paid out during the four weeks from September 18, taking in the likes of the Commonwealth Bank, with a near $4 billion payout pool, BHP, with $1.74 billion, and Telstra, with $1.84 billion.
“Dividends remain in vogue,” CommSec chief economist Craig James says.
“But there is an ongoing reassessment by companies about just blindly paying a dividend at all costs. More companies see value in investing in their businesses.”
Nowhere is this more apparent than at Telstra, which earned the wrath of investors, many of them retirees, who heavily sold down the stock after it advised it would scale back its dividend payout ratio.
Worries about the rising level of competition in the mobile and national broadband network markets and the need to woo customers with cut-price offers have prompted Telstra chief executive Andy Penn to say the telco will keep more cash in reserve.