I would like to take a contrary view to Alan Kohler's with regard to bank share holdings. I cite the position of a person with $400,000 invested in a mix of, say, three of the four major banks and Telstra. If those shares provide the only taxable income for the individual, the dividends of $28,000 come with $12,000 of franking credits, allowing that person to receive a tax rebate of $6,450. In effect, the individual has received $34,450 in dividends for their $400,000 in shares, giving him or her a net yield of 8.6% or a gross yield of 12.3%. Furthermore, that rebate will be received annually by the individual and as dividends paid increase in the years ahead from those companies, the corresponding yields increase further. One may not be getting much in the way of growth in the companies’ prices in the years ahead, but there is plenty to be satisfied with in comparison to the 6% taxable obtained with a bank deposit.
– C Hall