ASX Shares Dividends

At least during the time of income reduction there’s no rates, insurance, bills, land tax to pay with the shares. Helps a tad in these times as the last thing we need at this moment is more bills haha

 

And one other advantage if you can call it that. If absolutely necessary you can get funds in two days and a sale is on the day you decide you must sell.

 

For sure

We also now have the Prime Minister advising that tenants can not be evicted for 6 months. I thought I voted Liberal

 

Don't know what a political view has to do with the title of this thread.

 

Don’t even get me started! I’m an exceptionally understanding person and my heart breaks for those in a prickly situation right now it really does, however like I said in another thread tenants must also have a rainy day fund.
These are wild times I get that with industries being shut, but truth is there are both renters and owners that are working in this industry, both renters and owners that are loosing jobs.
Also Scomos election slogan about a fair go for those having a go.....where’s the fair go for those who are in small business that don’t employ because ‘they are having a go,’ trying to get to a position where they can employ etc.
Ah well, back on topic, how about those dividends ay!

 

As a last resort absolutely!

 

Its times like this that an understanding of dividend irrelevance pays off in spades.

We own businesses – Those businesses need to manage their cash flows according to their circumstances. Dividend distributions are just one component of them managing cash flow. I would much rather see companies be cautious, stop dividends and retain the cash.

In times like this when revenue in all assets is taking a hit that equity is a beautiful thing. No ongoing costs and divisible for sale if required to enable personal cash flow management. Others may prefer to not see the damage of owning assets which have a lack of market price transparency, but I’ll take the share market and all its volatility for investing my surplus every time. I hope every company I own which is facing a revenue shock cancels its dividends – I also hope every stock I own that finds itself in favourable circumstances also cancels its dividends and uses the cash to take advantage of the situation. If they manage their cash flows optimally, I will be better off even if I have to sell a few to create my own cash flow.

Buffers are inefficient for equity holders – you only need one to the extent you wish to buffer against a shutdown of the equity market itself otherwise your whole portfolio stays liquid.

Holding cash to avoid selling low is more timing than buffer and it comes with the decisions of when do you build it up, how big it should be, when you should use it, when you should replace it, what happens if it runs out?

And a cash buffer for timing has an opportunity cost that history has shown to outweigh the benefits.

If your getting uncomfortable with dividends being cut – revisit dividend irrelevance, you might find some knowledge to take comfort in. Or maybe you will find you weren’t really in the financial position that a high dividend portfolio in good times led you to believe you were. Either way knowledge is power.

 

"UK banks agree to scrap £8bn dividends amid recession fears"

UK banks agree to scrap £8bn dividends amid recession fears

Are we next?

 

Dividends on freeze

New Zealand orders banks to stop paying dividends

 

And as it is a possibility:

 

Dividends are paid out of company profits, and profitability forecasts has a big impact and also affects the share price.

If a company does not make a profit, then the only way they can pay a dividend is out of company reserves, a slippery slope and often only employed in unusual circumstances.

I am not expecting much joy this reporting season as many companies will prioritise maintaining liquidity to survive.

 

Note that this is the uk and nz regulators saying the banks are not allowed to pay dividends, regardless of ability.

If losses use up the earnings that would have gone to dividends, fine.

if losses do not use up the dividends then shareholders can expect increased dividends in the future.

if they paid out dividends and turned out losses are higher than expected, theyll do capital raisings.

in that sense, cutting the dividend is probably a better outcome than capital raisings if costs are higher than expected.

Usually a company cuts dividends at its peril. Here they might have apra cover. Longer term it might turn out to be a good thing.

Once things settle down a franking credit rich buyback would probably be on the cards too.

 

I dont know anything about this subject, but was really shocked that investors could miss out on dividend. Everything I read was the contrary

 

Already started, NZ ordered all banks not to pay a dividend and that including all Australian banks in NZ

I don't think it matter any way banks wont have much money to pay a dividend until we back on track, they can't save everyone and there will be some bad debts coming.

Banks are highly leveraged it doesn't take much to take out their profit in crisis

 

Holding dividends might be better than capital raisings, if those are the two alternatives.

Dividends paid to offshore shareholders and superfunds where members are below preservation age, doesnt add anything immediately to the economy.

everything is about the short term.

 

Great summary, I agree 100%. Now is the time for companies to be retaining cash and using the opportunity to buy up distressed assets at a discount. Will have a much better impact over the long term than distributing any surplus to shareholders.

 

Aparently there is talk of the govt removing franking credits to help pay for the stimulus packages.

 

Unsurprising.
There will be a lot of extra and raised taxes to pay for this event.
Negative gearing may be a casualty.
The opposition can hardly oppose measures they promoted.

 

Now I know I am getting old!
Reduced or no dividends are not unusual in a recession.
Stock markets can be closed for days, meaning no share trading.
In a serious property downturn, it has been known for unlisted property trusts to be frozen, with investors unable to access their money for many years.