Credit Suisse: $70 Billion In Dividend Payouts To Australian Investors Is Holding Back Capital Expenditure

Scrooge McDuck throws counterfeit money (Photo: Carsten Koall / Getty Images)

Earnings season in Australia has just finished and what a boom it has been for Australia’s stock owners.

A record $67.8 billion in dividends was declared for the financial year ending June 30. That’s up from the $61.3 billion in the previous financial year, according to analysts at Credit Suisee via the AFR this morning.

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The strength of earnings and dividends has helped propel the ASX 200 to levels not seen since before the GFC as the major banks, Telstra and big retailers such as Wesfarmers all paid large dividends back to investors.

Interestingly, Credit Suisse equity strategist Hasan Tevfik says that the level of dividend payouts and the demand for cash from self-managed super funds is holding back capital expenditure within the economy.

“It is obvious that some of these ­massive dividend payments are coming at the expense of capex,” he said.

“This is what investors want now, ­especially ‘selfies’ [SMSFs] who are ­collecting more than $10 billion of ­dividends themselves. It is important to ­remember Australian companies are contributing a significant amount to our pension scheme.”

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