Australians can receive money without having to pay tax on it simply by buying the right shares.
Twice a year, shareholders are paid interim dividends for every share they own if the company has performed well.
Even during the year of Covid, 80 per cent of big corporations have given something back to mum and dad investors.
These dividends are also tax free because the corporations listed on the Australian Securities Exchange have already paid company tax.
Shareholders are given franking credits, from the companies they own stock in, under a system known as dividend imputation – a key issue that cost Labor the 2019 federal election.
Australians can receive money without having to pay tax on it simply by buying the right shares. Twice a year, shareholders are paid interim dividends for every share they own if the company has performed well. Pictured is the Australian Securities Exchange in Sydney
The top ten dividend performers
Fortescue Metals Group: 11.1 per cent
Cromwell Property: 9.5 per cent
AGL Energy: 8.4 per cent
Rio Tinto: 8.2 per cent
Aurizon Holdings: 7.8 per cent
Unibail-Rodamco-Westfield: 7 per cent
Spark Infrastructure: 6.7 per cent
Abacus Property: 6.5 per cent
Waypoint REIT: 6.5 per cent
Perenti Global: 6.4 per cent
Source: CommSec analysis of twice-yearly interim dividends as a proportion of the March share price
Shareholders have since the August and February earnings season received $26billion as 80 per cent of ASX200 companies planned to pay out dividends by May, a CommSec analysis showed.
Iron ore miner Fortescue Metals Group has, during the past year, given the most back to shareholders as a proportion of the share price.
Shareholders received an interim dividend of $1.47 for the second half of calendar 2020 and a $1 fully-franked final dividend for the first half of calendar 2020.
Those dividends of $2.47 constituted 11.1 per cent of Fortescue’s share price of $22.10 during March.
Iron ore prices during the Covid pandemic have surged to $US174 a metric tonne, the highest level since 2011 as Chinese bought more of the commodity used to make steel.
CommSec senior economist Ryan Felsman this made Fortescue Metals the best dividend performer.
‘The mining company’s really benefiting from China’s increased demand, particularly for iron ore and that’s really on the back of their V-shaped, industrial-led recovery focusing on property construction and infrastructure spending,’ he told Daily Mail Australia.
‘We have seen record exports of iron ore out of Australia in the last couple of months and at the same time we’ve seen the iron ore price straddling nine-and-a-half year highs.
Iron ore miner Fortescue Metals Group has, during the past year, given the most back to shareholders as a proportion of the share price. Pictured is billionaire founder Andrew Forrest with his wife Nicola in New York in 2013
‘That has really boosted the bottom line of Fortescue and that’s enabled them to boost their dividend payouts to their shareholders.’
Almost half, or four of the top ten, of the best dividend performers owed their success to China and rising commodity prices.
Rio Tinto paid dividends comprising 8.2 per cent of its $111 share price.
Freight rail company Aurizon paid out 7.8 per cent of its $3.90 share price.
Perenti Global, a mining services company, paid 6.4 per cent of its $1.06 share price.
Property took out four spots with Cromwell Property, a commercial property group, paying dividends making up 9.5 per cent of its 84-cent share price.
Global shopping mall developer Unibail-Rodamco-Westfield paid dividends worth 7 per cent of its $5.64 share price.
Global shopping mall developer Unibail-Rodamco-Westfield paid dividends worth 7 per cent of its $5.64 share price. Pictured is the rebuilt World Trade Centre in New York
This is a separate company to Scentre which manages Westfield shopping malls in Australia.
Abacus Property, another commercial property group, paid out 6.5 per cent of its $2.73 share price while Waypoint REIT, the owner of service stations and convenience stores, also paid 6.5 per cent of its $2.43 share price.
Energy assets companies had two spots with AGL Energy paying out 8.4 per cent of its $9.79 share price and Spark Infrastructure giving dividends comprising 6.7 per cent of its $2.12 share price.
Unlike the American stock market, the Australian Securities Exchange is yet to surpass the record highs it reached in February 2020, before the declaration of the Covid pandemic.
Energy assets companies had two spots with AGL Energy paying out 8.4 per cent of its $9.79 share price
CommSec predicted the benchmark S&P/ASX200 would hit a record 7,200 points by the end of 2021, overtaking the 7,197.2 level of February 20, 2020 before the market crashed then recovered.
‘We think that there’s certainly upside, of course we’ve seen pullback and choppiness over recent weeks,’ Mr Felsman said.
During the February reporting season, mainly for half-year results, 79 per cent of ASX200 companies paid a dividend to shareholders.
This was below the 87 per cent level of February 2020, when the Australian share market peaked, but above the August level of 69 per cent.