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Since the start of the financial year companies have paid out around $4 billion in dividends to shareholders. But dividend payouts really start to ramp up from September 18, says

Commsec chief economist Craig James.

It is clear that

dividends remain in vogue. But as has been apparent for the last few reporting periods, there is an

ongoing re-assessment by companies about just blindly paying a dividend at all costs.

More companies see value in investing in their businesses. Especially with threats such as the entry of Amazon into Australia.

Scentre Group and Westfield are reconfiguring and redeveloping shopping centres to improve consumer experiences and ultimately attract more people to their centres.

Telstra also is in the process of adjusting pay-out ratios, ploughing more money back into the company than just issuing dividends.

Of the ASX 200 companies reporting for the year to June, around 91 per cent of firms elected to pay a dividend, up from the long-term average of 86 per cent, but down from the record level of 92 per cent a year ago.

Certainly there

hasn't been a shortage of cash available to firms. Of the 139 companies reporting full-year results, 91 per cent reported a profit and 65 per cent lifted profit – above the "normal" proportion of 60 per cent. Aggregate cash holdings rose by 27 per cent over the year to $91 billion. Adding in the 31 companies reporting half-year earnings, cash stood at a record $113 billion.

Over the period from July to December,

over $26 billion will be paid to shareholders as dividends. A year ago dividend payouts were around $24 billion, while in the interim earnings earlier this year, dividend payouts totalled around $22 billion. So shareholders continue to be well rewarded.

Some shareholders will receive the dividends as cash and others will employ the proceeds through dividend reinvestment schemes. While the majority of the funds will be paid to domestic investors,

other funds will go offshore to foreign investors. And while some of the dividends are paid to ordinary investors, other payments are paid to superannuation funds, thus with more limited short-term consequences for the economy.

While dividends flow at this time every year,

the dollars potentially could lift spending. Certainly the dollar value of payouts has lifted. Consumer confidence appears to be improving. Inflation is still low. And interest rate settings look to remain on hold.

Sumber

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