In Australia, we have traditionally seen large, mature companies (such as banks, retailers) pay relatively high...

In Australia, we have traditionally seen large, mature companies (such as banks, retailers) pay relatively high dividends (as a percentage of earnings / percentage of current share price –dividend yield), essentially as a way of returning ‘spare cash’to shareholders, in comparison to similarly developed countries / economies. i)Comment on why you think that this (relatively high dividend payout) may be the case. Focus your discussion on what differences may exist, if any, in the local (Australian) environment as opposed to elsewhere.

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Companies who are generally having a higher amount of cash and higher amount of profit are engaged into paying the higher amount of dividend to their shareholder because they think that returning of money to the shareholder is a positive factor that will be discounted into the share price of the company and it will be leading to improved market sentiments of various investors.

High dividend is generally paid out when the company is trying to attract more of the investors and they are caring about the investors and investors are invested into the company who are wanting a uniform rate of return from the company and it could also be the case that company is a mature company and the company does not have the ability to grow its cash and hence it is returning back surplus money to the shareholder so the company is not having battery investment projects and hence it is trying to return the money to this share holder because they think that the shareholder can maximize the money better than the company.

there are various differences in other countries because in developed market, majority of the companies are mature firms whereas, in other developing markets companies are generally growing firm, so they will be refraining from distribution of dividend and they will be investing their profits back into the business.

Various government may also promote these policies by taxing the dividend at a lower rate that will be motivating the company in order to pay a higher amount of dividend.

jeff jeffy answered 2 years ago

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