Shareholders look forward to a record-breaking $72.3 billion in dividends

Alison Banney 13 March 2017 NEWS

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Australian shareholders can expect $22.3 billion in corporate profits to be paid out over the next 10 weeks alone.

Corporate profits could be becoming a growing source of income for Australians, with a record-breaking $72.3 billion to be paid out by Australian companies over the 2016-17 financial year.

Australian shareholders will be happy to hear they’re set to receive a share in $22.3 billion in dividends over the coming 10 weeks.

This is a significant jump from the same time last year when $19 billion worth of dividends were paid out.

For the February earnings reporting season, the peak of the dividend payments can be expected in the last week of March and the first week of April, when $7.9 billion and $7.3 billion respectively will be paid out to local and overseas shareholders.

Chief economist at CommSec Craig James said shareholders are not likely to go on a shopping spree with their earnings, telling the Sydney Morning Herald:

“What we have seen over recent years is that individual investors or consumers have been more inclined to take a conservative approach. They aren’t spending the money that comes through – they’re more likely to be looking at ways to pay down debt or investing further.”

Interestingly, while we are seeing record-breaking dividends, the number of companies paying dividends overall has decreased.

James also warned that these dividends are great in the short term but may not be a solution for long term profits, saying, “You might argue some companies are being a bit lazy in terms of their approach. It’s good news for shareholders to get those dollars back, but in the longer sense they want to see value increasing over time.”

Investors should consider a company’s long term vision, including growth opportunities and mergers and acquisitions in addition to dividend payouts when considering future investments.

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