Uneven spread to $15b in dividends

MORE than $15 billion of share dividends have been handed out by big Australian firms in the past fortnight, but less than 15 per cent of this is landing in the bank accounts of individuals.

New figures from the Bureau of Statistics and the ASX show that households directly own just 13 per cent of the Australian share market. Foreign investors own 45 per cent and institutions – such as superannuation funds and managed funds – own 42 per cent.

Some dividends paid to individuals are immediately pumped back into the share market through dividend reinvestment plans and other strategies, but several billion dollars flows into households.

Popular stocks BHP Billiton, the Commonwealth Bank ($4 billion alone), Telstra and Wesfarmers paid dividends last week, while Fortescue Metals Group, Woolworths, CSL and Amcor are among those still to deliver.

CommSec chief economist Craig James said about $28.5 billion worth of dividends was being paid between July and October.

“It’s one of the biggest dividend payment periods in recent years,” he said.

Mr James said some dividends would help top up household budgets as wages battled to keep up with the rising cost of living. “People may want to supplement their spending by using some of these dividends.”

Shaw and Partners senior investment adviser Jed Richards said older investors tended to take dividends in cash, while younger people reinvested.

“Dividends are more important than ever at the moment,” he said.

With analysts forecasting 10 per cent total share market returns for the year ahead, and stocks such as Westpac paying a 6.8 per cent dividend yield – or 9.7 per cent once franking tax credits are included – investors could get the forecast return even if the share price went nowhere, Mr Richards said.

“You are getting everything you are expecting in just the dividend,” he said.