(Australian Associated Press)
Around $22 billion will flow to shareholders this spring in a boost for the economy and the share market.
Despite challenging economic conditions, 91 per cent of the top 200 listed companies to report annual results in August decided to pay dividends to shareholders, well above the long term average, according to research from CommSec.
Of those, 63 per cent improved their payouts.
Those rewards have now begun arriving, and will continue to flow up to December 1.
The next three weeks are the peak payout period, including $4.6 billion from BHP Billiton, though the mining giant’s shareholders are spread across the world, $3.6 billion from Commonwealth Bank and $1.9 billion from one of the most commonly held stocks, Telstra.
The recipients are faced with three choices – spend, save, or reinvest those funds, says CommSec chief economist Craig James.
“For companies, retailers and financial firms, the dividends flowing through to shareholders clearly represent opportunities,” he said.
“The Reserve Bank also needs to be mindful as stronger confidence and an inflow of funds represent a potential spending boost.”
But reinvestment, particularly for institutional shareholders, is a common choice, reflected in a seven per cent rise in the ASX200 index at this time last year, Mr James said.
But with the market currently racked with caution amid signs of a weakening Chinese economy, and uncertainty about the timing of an interest rate hike in the US, that may not be the case in 2015.
“The question is whether another big inflow of cash provides another boost this year,” Mr James said.
The ASX200 index briefly fell below 5,000 points again on Wednesday, and is near its lowest level in more than two years.