Lilly Vitorovich
(Australian Associated Press)
Show me the dividend!
A slew of Australian companies, including Blackmores and Caltex, delivered bumper dividends during February’s profit-reporting season, thanks to strong demand for their products and services in an improving local economy.
A record 91.2 per cent of companies declared a dividend for the six months to December 31.
That’s up from the average of 85 per cent over the past 12 reporting seasons, according to CommSec.
In another sign of improving economic conditions, the current dividend yield of 4.89 per cent is the highest since the global financial crisis in June 2009.
Excluding the GFC, dividends are the highest in nearly 25 years years.
Dividends rose on aggregate by 7.5 per cent.
Stripping out mining giant BHP Billiton’s savage dividend cut, dividends overall were up 9.8 per cent.
Of the companies that issued a dividend, 84 per cent increased or maintained their payments.
CommSec economists Craig James and Savanth Sebastian said companies have an important balance to strike between paying dividends and investing in their business.
“Companies must be competitive in attracting shareholder dollars,” they wrote in a report published on Monday.
“But to generate higher future dividends and lift share prices, companies can’t neglect investment and acquisition opportunities.
“It is a matter of determining the right return on investment and this isn’t a purely mathematical question.”
The Reserve Bank of Australia has urged Australian chiefs to invest for future growth, rather than returning capital to shareholders via dividends or share buybacks.
In the current profit reporting season, a record 62.8 per cent of companies increased their dividend, while about 13.9 per cent kept them steady, CommSec found.
Around 14.6 per cent of companies cut their dividend, while 8.8 per cent didn’t declare one.
Vitamin maker Blackmores was one of the star performer’s during the profit-reporting season, almost tripling its interim dividend to $2.00 a share, after a healthy set of financial results due to strong demand from China.
Fuel retailer Caltex increased its final dividend by 40 per cent to 70 cents a share after a record annual profit.
But it wasn’t all good news, with the mining companies slashing their dividends amid major losses because of the commodity price slump.
BHP cut its interim dividend to 16 US cents from 62 US cents a year ago, and axed its progressive payout policy after swinging to an interim net loss of $US5.67 billion.
Rio Tinto warned dividends could almost halve in 2016 after reporting a $US866 million annual loss.
CommSec’s figures are based on 136 companies that reported results for the six months to December 31, and 27 companies that posted results for the 12 months to December.
Almost 90 per cent of those reporting interim results booked a profit near record levels.
