Research by CommSec has projected $25.8 billion will be paid out to shareholders in the coming weeks. Although the $26 billion total is down year-on-year from $27.5 billion in February 2020, it is markedly higher than the $21.6 billion that was paid out in August.
The improved payouts come after 86 per cent of ASX 200 companies reported they were in the black for the half-year to December, with 60 per cent of those who made a profit managing to lift their earnings.
For the six months to December, 79 per cent of companies elected to pay a dividend, compared to 68 per cent for the year to June. As noted by CommSec, the average over the last 20 reporting seasons stands at 86 per cent.
Almost 35 per cent of companies have lifted their payouts, while 14 per cent held steady, 30 per cent delivered cut dividends and 21 per cent elected not to pay.
But cash at hand has increased by more than 50 per cent on a year prior, rising from $82 billion in 2020 to $124 billion now.
CommSec chief economist Craig James commented while more companies are in a position to issue or increase dividends as the market rebounds from the COVID crisis, many are still exercising caution.
“Other companies, such as those dependent on movement of people across foreign borders may not be in a position to pay dividends,” Mr James said.
Dividend payments from the interim reporting season are expected to be completed in early May, with some companies starting distributions in February.
CommSec noted the largest week for dividend payments will be the week ending 26 March, with around $12 billion to be paid out to shareholders.
The majority of funds will be distributed to local investors.
Mr James said dividends have taken greater importance over time, especially as new retail investors have entered the market, seeking higher returns in a low inflation and diminished interest rate environment.
“Australian companies have to compete with residential property markets and international shares to secure the affection of investors and with share prices often constrained by a range of macro influences, that puts more onus on companies to offer attractive dividends or to support share prices with buy backs,” he said.
CommSec has issued a positive outlook for the economy, however there is some uncertainty in the near-term.
“While federal, state and territory governments and the Reserve bank have guided the economy through the crisis phase, now they will need to be more agile in their responses to economic recovery, especially with the imminent expiry of the JobKeeper wage subsidy,” Mr James said.
The report has also cautioned that investors are “probably getting a little too optimistic”, warning there are still challenges ahead with mutant strains of the virus and spare labour capacity expected to stay for years.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
