A debate has begun over whether Australian companies are paying out too much cash in dividends to shareholders, and not enough capital is being reinvested
A debate has begun over whether Australian companies are paying out too much cash in dividends to shareholders, and not enough capital is being reinvested. We think this is an extremely serious issue and is closely linked to Australia's future economic performance and the performance of local equity markets in coming years. But we also believe there is a lack of political and central bank will to address the issue. There are two main reasons why companies are choosing to pay out capital in dividends to shareholders rather than retain and reinvest that capital. Firstly, Australia's ageing population is creating strong demand from shareholders for increased dividends. Secondly, the slowing growth profile of the economy and the high $A means business aren't encouraged through return on capital to retain capital. Read more (VIEW LINK)
The Clime Group is a respected and independent Australian Financial Services Company, which seeks to deliver excellent service and strong risk-adjusted total returns, closely aligned with the objectives of our clients.