Share dividends a mixed bag: which ones are rising the most?

Cash is flowing to investors from some ASX-listed stocks while others reman in a Covid-induced dividend funk. See the winners.

Several of Australia’s biggest companies are showering investors with hefty dividend increases as business bounces back from the pandemic.

But others are holding onto their cash reserves as geopolitical worries take over from Covid as the chief cause of concern, and sharemarket specialists say investors shouldn’t expect a broadbased dividend surge.

The nation’s two largest stocks, BHP and Commonwealth Bank, have delivered dividend rises of 60 per cent and 17 per cent respectively in the current profit reporting season.

CommSec chief economist Craig James said BHP had a “tremendous six months and is in a good position to hand money back to shareholders”.

Other miners and banks were “in a good space” too, he said.

Commonwealth Bank dividends rose, but not yet to pre-Covid levels. Photo: Saeed Khan/AFP

Rio Tinto handed out a record amount, although fellow iron ore miner Fortescue Metals slashed its dividend by more than 40 per cent to 86c a share but is still paying a yield above 16 per cent.

Some of the dividend rises were simply shareholder payments rebounding back towards pre-pandemic levels, while travel giants such as Qantas and Flight Centre haven’t paid dividends since 2019.

Mr James said until recently companies had been “wanting to hand out dividends to shareholders” but there had been a change in the past year.

“Now companies are saying now is the time to push money back into the business,” he said.

“Other companies are looking for mergers and acquisitions – there will be some opportunistic action.

“Profits are rising but companies are not splashing out their cash in terms of dividends.”

Mr James forecast a more thoughtful approach from Australian companies and “steady as she goes” strategy with dividends.

Shaw and Partners senior investment adviser Jed Richards said many companies – including BHP and CBA – had been more cautious, resulting in plenty of spare cash.

“A lot of these companies in the last couple of years have become more gun-shy about taking on big projects,” he said.

“Their cashflow is excellent but they haven’t really been brave enough to make major acquisitions in the economic environment and Covid environment.”

Some major companies are still not paying dividends as they battle through Covid.

Mr Richards expected “more of the same” for dividends going forward. Companies had reduced debt levels during the pandemic and would hand back extra cash to shareholders, he said.

BetaShares chief economist David Bassanese said the outlook for dividends was “pretty good”.

“Corporate profits have rebounded and we are seeing both miners and banks lifting their dividends,” he said.

“If anything, there may be upgrades coming through.”

KA-CHING! BIG DIVIDEND INCREASES

BHP up 60% from $1.31 to $2.11 per share (10.9% yield)

Commonwealth Bank up 17% from $1.50 to $1.75 (4% yield)

Rio Tinto up 19% from $US4.02 to $US4.79 (7.9% yield)

BlueScope Steel up 317% from 6c to 25c (1.8% yield)

REA Group up 27% from 59c to 75c (1.1% yield)

Perpetual up 33% from 84c to $1.12 (5.1% yield)

Ampol up 78% from 23c to 41c (3.1% yield)

Cochlear up 35% from $1.15 to $1.55 (1% yield)

Originally published as Share dividends a mixed bag: which ones are rising the most?