Sharemarket: Dividends Still Strong

Posted in Wealth
16/11/2012 Level One

The big four banks have reported over $23 billion in profits for the full-year to 30 September 2012. The individual earnings are:

  • NAB reported $4.08 billion – down 22% due to rising bad debts in its UK businesses;
  • CBA reported $7.09 billion – the largest result by a non-mining company in Australia;
  • ANZ reported $5.66 billion – record earnings;
  • Westpac reported $6.60 billion – WBC being the second largest mortgage lender.

These strong profits are keeping their dividends high for investors.

When you think of the sharemarket two things come to mind – volatility and dividends. Volatility is the share price we see moving up and down, usually on a daily basis; and dividends are the income we receive for taking the risk and investing into the listed companies.

Looking at a sample of the blue-chip Australian stocks we recommend for our clients below, you can see the dividend growth over the last 10 years has been relatively steady. For the post-GFC years 2009 to 2011 there was an evident fluctuation in the dividends paid for some stocks, however 2012 has seen the dividend rate recover and grow further in a lot of cases.

 Dividend Paid Per Share
BHP Billiton$0.2329$0.2457$0.3635$0.4796$0.5944$0.7884$1.1363$0.9855$0.9795$1.0615
Rio Tinto$0.9689$0.9021$1.0885$2.5276$1.4353$1.7037$1.0148$1.0083$1.1175$1.5271
Woodside Petroleum$0.6200$0.5200$0.6700$1.0700$1.2600$1.3500$1.1000$0.5500$0.5244$1.1406
Westpac Bank$0.7800$0.8600$1.0000$1.1600$1.3100$1.4200$1.1600$1.3900$1.5600$1.6200
Commonwealth Bank$1.2400$1.8300$1.9700$2.2400$2.5600$2.6600$2.2800$2.9000$3.2000$3.3400
National Australia Bank$1.3600$1.6600$1.6600$1.6700$1.8200$1.9400$1.4600$1.5200$1.7200$1.7800
Telstra Corporation$0.2700$0.2600$0.4000$0.3400$0.2800$0.2800$0.2800$0.2800$0.2800$0.2800
Origin Energy$0.1000$0.1300$0.1500$0.1800$0.2100$0.5000$0.5000$0.5000$0.5000$0.5000
QBE Insurance$0.3850$0.4600$0.6300$0.7800$1.1200$1.2600$1.2700$1.2800$1.2800$0.6500

The progress of dividends for the companies above has been welcoming, especially considering that some of the share prices dipped as low as 40% over the same 10 year period. This can be seen as evidence that volatility does not necessarily mean dividend levels suffer if the share price falls.

Of course capital growth is important when investing for the long term, but the purpose here is to illustrate that the Australian sharemarket does indeed have its short-term benefits in the dividends paid by high quality stocks.


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