Investors’ $25bn dividend bonanza as companies gear up for cash splash

Australia’s biggest listed companies will shower shareholders with more than $25bn in dividends in the coming weeks as a bumper cash splash gets under way.

Australia’s biggest listed companies will shower shareholders with more than $25bn in dividends in the coming weeks.

Australia’s biggest listed companies will shower shareholders with more than $25bn in dividends in the coming weeks as a bumper cash splash gets under way.

And it is the nation’s mining giants that have emerged as the bellwethers of dividend payouts following an earnings season that saw the beats once again outnumber the misses.

Companies keen to spread the wealth include Woodside, Santos, CSL and Wesfarmers, but by far the biggest payouts will come from the booming mining sector, with BHP and Rio Tinto keeping the dividend party going, alongside banking giant CBA.

Leading the pack is Rio Tinto, which this month declared a whopping $US7.7bn ($10.6bn) in dividends, comprising a final payout of $US4.17 per share and a special dividend of US62c per share.

For the year, the mining giant’s payout topped a jaw-dropping $US10.40 per share, for a total $US16.8bn handed over to shareholders.

The windfall came after behemoth BHP declared a record interim dividend of $US1.50 per share after booking a $US9.44bn ($13.3bn) profit buoyed by a surge in the price of key commodities.

The Big Australian will fork out a total $US7.6bn in dividends for the first half after its net tax jumped 144 per cent on the back of stronger prices for iron ore, coal, oil and copper.

“The likes of BHP and Rio Tinto are now among the bellwethers in terms of dividend payouts,” CommSec chief economist Craig James said.

“That was not always the case but they’ve had a significant ­period of strength and strong demand for their products alongside historically high prices as well.”

Armytage Private director Bradley King said the resources companies were the standouts in dividends declared through ­February.

“They delivered above and beyond what they’ve historically averaged,” he said of the big miners.

Over the past 18 months, BHP and Rio have each shelled out more than $US22bn in dividends to cash-hungry shareholders.

But they’re not the only ones. Fortescue will pay shareholders an 86c a share dividend after booking a $US2.78bn half-year profit. While the payout is well down on last year’s $1.47 interim dividend, it’s still worth about $US2.6bn to shareholders.

The dividends flowing from the nation’s biggest miners come as the industry grapples with rising fuel prices alongside wage and labour pressures that promise to drive up costs.

The big payments were coming from the miners because they were flush with cash, AMP chief economist Shane Oliver said.

“Initially it was iron ore and while that’s come off a bit now, other commodity prices are doing pretty well.

“So they’ve got a lot of cash to spare and it’s a time when they’re not undertaking anything like the capex we saw several years ago through the mining boom,” Dr Oliver told The Australian.

Aside from the miners, the nation’s largest lender, Commonwealth Bank, has also been splashing the cash, lifting its own dividend payout 17 per cent this reporting season.

The bank declared a $1.75c per share dividend when it reported its interim result earlier in February, up from the $1.50c per share payout of a year ago.

At the same time, CBA flagged it would return a further $2bn to shareholders via a buyback, on top of the first-half dividend payments of $3bn. It follows the lender’s $6bn capital return via a buyback last year.

Woodside, meanwhile, will dole out $1.4bn in dividends in the coming weeks, while Telstra and Wesfarmers will each pay $1bn.

The overall impression from the latest earnings season was that companies had weathered the Delta and Omicron waves “reasonably well”, Dr Oliver said.

“There has been some slowing in momentum but only to around normal levels, with 64 per cent of companies reporting profits up on a year ago, while 54 per cent have raised dividends, less than the average of 59 per cent.

Even with the big names splashing the cash, Commsec’s Mr James said companies were being more selective this year as they eyed opportunities ahead.

“Companies haven’t just been blindly paying out dividends to shareholders. They’re being much more thoughtful about where they will be allocating funds over the next six to 12 months and a lot of companies are redeploying their funds back into the business, shoring up their situation so they can take advantages of the ‘living with Covid’ world.

While 81 per cent of companies issued dividends in the February reporting season, it was still shy of the long term average of 85 per cent. “Airlines, the gaming stocks, the casino stocks and travel stocks, they’re all still not in a position to be able to issue dividends to the same extent that they were in the past,” Mr James said.