The remarkable power of dividends can sometimes be overlooked by investors – particularly by those new to investing – who can sometimes be more focused on the potential for share price appreciation. Dividend payments make a huge difference in returns, particularly when it comes to Australian listed companies because they pay more of their profits as dividends than just about any other market.
Hugh Dive of Atlas Funds Management says investors should not underappreciate the powerful impact of dividends and franking credits.The largest 200 companies listed on the Australian Securities Exchange will pay about $85 billion in dividends over the next 12 months. While the share prices of those same companies rose 43 per cent over the past 10 years, if dividends were reinvested to buy more shares, the overall return would jump to 116 per cent. Commonwealth Bank’s (CBA) share price has risen 58 per cent over the past 10 years. After accounting for dividends, that becomes 112 per cent, figures from Atlas Funds Management sho