Dividends just as attractive as term deposits
Increasing confidence among companies has resulted in a 6.4 per cent growth in dividends across the equity market over the last six months, according to Russell Investments.
Russell provides the Russell Australia High Dividend Index and Russell Investments portfolio manager, Scott Bennett, said the growth of dividends was likely to become an even stronger theme in the year ahead. He said companies were more inclined to return capital to shareholders either via dividends or buy-backs, adding that dividend yield were looking as attractive as term deposits.
Bennett stated that the average term deposit currently yielded 6.1 per cent while the average dividend yield across the Australian Stock Exchange was currently 5.8 per cent grossed up for franking credits, with the index yielding 7.3 per cent grossed up for franking credits.
“This half has really shown investors that dividends are on a steady growth path and as a result dividends are going to be a really competitive source of income compared to other investments,” said Bennett.
The Russell Australia High Dividend Index as at March 2011 revealed that the top 10 stocks in terms of grossed up yield were SP AusNet (17.9 per cent), Tatts Group (13.5 per cent), Metcash (9.3 per cent), National Australia Bank (8.6 per cent), Commonwealth Bank of Australia (8.4 per cent), Westpac Banking Corporation (8.4 per cent), Australia New Zealand Banking Group (7.7 per cent), Woolworths (6.5 per cent), Wesfarmers (6.1 per cent) and BHP Billiton (3.1 per cent).
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