The continued growth in Australian dividends, in one chart

Profits are growing at most Australian listed companies, and dividends are following suit, says Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital.

“It’s still early days in the December half profit reporting season with only a third of companies having reported, but so far it remains reasonably good,” he says.

“46% of results have exceeded expectations against a norm of 44%, 74% have seen profits rise from a year ago and 72% have increased dividends from a year ago.”

This chart shows the evolution in dividend payments going back to 2012.

Source: AMP Capital

More listed companies are lifting dividends than at any point in recent years, at least based on early indications.

With wage growth continuing to bump along near record lows — helping to lift corporate profitability levels — stocks could be one option for households who are looking for a bit of extra income, presuming they’re prepared to take on the capital risk, of course.

In Oliver’s opinion, the recent selloff in Australian stocks offers a buying opportunity.

“Share market volatility has not gone away despite the relative calm of the last week, but shares are still likely to trend higher this year as global recession is unlikely and earnings growth remains strong globally and solid in Australia,” he says.

“We remain of the view that the ASX 200 will reach 6,300 by end 2018.”

It currently sits at 5,912.

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