Letters of the Week

A dividends puzzle, cashing in on the banks, and pension plan tests.

I found Scott Francis’ recent article, A steady dividends flow, very interesting, yet puzzling. In the article, Mr Francis suggests that BHP outperforms CBA as a dividend payer. I don’t understand this reasoning. I’m a shareholder in both and I believe the payout ratio of BHP is about 39%, whereas CBA is about 72%. When I was completing my 2009/10 tax return, I was looking at the dividends received. At the time the value of my holdings in both companies were much the same. However, my CBA shares provided double the level of dividends when compared with BHP dividends.

Now, I agree that Mr Francis’ argument is based on units held, whereas my comments are based on the dollar value of my holdings; nonetheless, there is something here I don’t understand.




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