It’s dividend season at Australia’s listed companies with about $19 billion to be paid out over the next month or so.
The big pay day is this Friday with about $8.6 billion in dividend cheques, a big one day injection into the Australian economy.
According to CommSec, just over $19 billion — or about 1.2% of GDP — will be paid to shareholders from March to late April.
This is less than the $24.7 billion of last year, mostly because of smaller payouts by miners struggling against falling global commodity prices.
The dividends are flowing after the recent earnings season when the majority of companies reporting half year earnings results (91%) chose to pay a dividend. About three quarters (77%) lifted or maintained dividends.
While policies differ from company to company, generally 65% to 75% of earnings are paid as dividends. This usually keeps shareholders happy.
The current dividend yield of the ASX 200 is 4.94%, just below the highest levels recorded since the global financial crisis in 2009.
Over the last decade dividends have averaged 4.6% a year with share appreciation at 3.6%, resulting in total average returns of 8.2% a year.
However, it’s getting tougher for companies to keep increasing dividend payouts.
“All companies realise that the world has fundamentally changed,” CommSec says.
“It is a low inflation — and therefore low cost — environment. It is increasingly tough to generate revenue. In large part this reflects globalisation – the increasing realisation that competition is global. More and more industries are experiencing this.”