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A dividend bonanza is set to hit investors in Australia

Bloomberg Published on Mon, Feb 04, 2019 / 7:20 AM GMT+8

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SYDNEY (Feb 4): Australian investors are set to receive a boost in dividend payouts this month as companies rush to avoid a looming overhaul of tax rules if there’s a change of government.

The main opposition Labor party, which is favorite to win elections expected in May, is pledging to tighten so-called franking rules, under which shareholders reduce their overall tax liability. Several companies are expected to use up franking credits that would be rendered less valuable to some investors if the rules change, helping swell the total expected payouts this earnings season to about A$29 billion ($28.4 billion).

“Given that there are risks with this policy coming in, you’d be better to pay any of the excess franking out this financial year than next,” said Don Hamson, managing director at Plato Investment Management Ltd, whose strategy is formed around dividends. Woolworths Group Ltd., Harvey Norman Holdings Ltd. and Flight Centre Ltd. are among companies which may bring forward capital management plans to use up excess credits, according to Morgans Financial Ltd. analysts.