Shareholders in Australian listed firms are about to receive billions in dividend payouts over the coming weeks.
According to Craig James and Savanth Sebastian, economists at Commsec, between early March and the end of April, over $19 billion will be paid to shareholders, down from $24.7 billion a year earlier on the back of smaller payouts by resources firms.
Over the four-week period to April 15, $16.1 billion will be paid out as dividends by listed companies,” says James and Sebastian. “In the week ending April 1, dividends totalling $8.7 billion will be paid; in the week ending April 8, $4.7 billion will be paid out as dividends; and in the week ending April 15 dividend payments totalling over $1.5 billion will be made.
The chart below, supplied by Commsec, puts those figures into a timeline for investors.
The only question now is whether the billion in dividends will be reinvested in the market, spent or saved.
“Some investors have a choice over the next few weeks. That is, those investors who still elect to receive dividend payments direct to their accounts. They can choose to spend the extra proceeds, save the proceeds or use the funds in addition to other savings to reinvest back into shares or other investments,” say James and Sebastian.
Given the recent 10% rally in Australian stocks and increased political uncertainty, it will be interesting to see what approach investors will take.
Strong labour market conditions, and as a consequence robust household spending, are seen as key factors that will likely determine how Australian economic growth plays out this year. Any pullback in spending, at a time when wages growth is increasing a generational lows, could see the RBA add to monetary stimulus through additional rate cuts later in the year.