ASX to start on good note, and the dividends are coming

Investors and super fund members can look forward to receiving close to $40 billion. That’s a big collective number thanks to COVID-rebound dividends.

Australian Foundation Investment - ASX to dip, but the dividends are coming

Despite Wall Street’s fall overnight, the ASX is finally tipped to start the morning on a good note.

Here’s what we know:

  • ASX futures were 0.4% to 7,396 at 6.32am AEST
  • Australian dollar is at 73.67 US cents
  • Spot gold gained 0.3% at $US1,794.22 per ounce
  • Brent crude fell 1.9% to $US71.26 a barrel
  • US oil fell 2% to $US67.92 a barrel
  • Iron ore fell 1.5% to $US130.26 a tonne

Australian markets

The dividends are coming

Investors and super fund members can look forward to receiving close to $40 billion.

That’s a big collective number thanks to COVID-rebound dividends.

Commonwealth Bank, BHP Group and Fortescue Metals Group (ASX:FMG) will lead the way.

The CBA’s dividend more than doubled to $2 a share – up from 98c in 2020.

CBA investors can expect their windfall on September 29.

Analysts expect the other major banks – Westpac, ANZ and NAB – will follow suit and sharply lift their dividends.

“It’s a record year for dividends flowing through to shareholders, up around $40 billion,” AMP Capital head of investment strategy Shane Oliver said.

“Twelve to 18 months ago the banks provisioned for sharp increases in non-performing loans and people defaulting on mortgages, and that never happened,” Dr Oliver said.

“So consequently, that money put aside is freed up,” he said.

The miners were also winners as commodity prices surged.

“The miners reported particularly strong dividend yields courtesy of a resurgence in commodity prices, which have boosted cash flows and balance sheets,” CommSec chief economist Craig James said.

Fortescue’s final dividend more than doubled from $1 to $2.11, BHP’s more than trebled to $2.72 and Rio Tinto’s rocketed from $2.16 to $7.60.

Investors can expect to see the money in the last two weeks of September, although most property trusts, Australian Foundation Investment (ASX:AFI) Company, and Domino’s Pizza Enterprises have already paid.

No soup for you!

While holders of bank shares and Domino’s lovers are set to win, companies such as Qantas, Flight Centre and Crown Resorts won’t have it so good.

These businesses were hit hard by COVID (and in the case of Crown enquiries and licence losses) and will not be declaring dividends.

In fact, 19% of companies won’t declare any dividend at all, above the yearly 15% average.

Australian indices

  • ASX 200 fell 1.90% to 7,369.50
  • ASX24 futures rose 0.4% to 7,394   
  • S&P/ASX Small Ordinaries fell 2.40% to 3,474.00  
  • All Ordinaries fell 1.90% to 7,658.90 

US markets

Wall Street’s pullback was due to investors assessing the pace of economic growth while weighing fears of the rapid spread Delta through the US and the impact of that on consumer confidence and spending.

“The economy seems to be slowing down a little bit and it’s hard to know how much is temporary because of the delta variant and how much is the new normal,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

The Labor Department’s August job survey was weaker than expected, however, job postings are at record levels, so there are mixed messages now that investors must digest.

“The big question is whether the job market will get a lot stronger toward the end of this year into next year,” Zaccarelli said.

US indices

  • Dow Jones fell 0.4% to 34,879.38  
  • S&P 500 dropped 0.5% to 4,493.28   
  • Nasdaq fell 0.3% to 15,248.25

European markets

Eurozone stocks pushed higher following the European Central Bank (ECB)’s slight tweak to pandemic stimulus measures.

The ECB said it would slow its emergency bond purchases implemented during the pandemic over the coming quarter.

ECB President Christine Lagarde said this was not tapering, however refrained from detailing how the Bank plans to end its €1.85 trillion Pandemic Emergency Purchase Programme (PEPP).

European indices

  • STOXX 600 fell 0.064% to 467.57  
  • German Dax rose 0.1% to 15,623.15
  • UK FTSE fell 0.1% to 7,024.21

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