Australia’s obsession with dividends is doing you damage

If ever there were a sign that Australian investors are obsessed with dividends, this is it: Cochlear (ASX: COH) posted record sales for 2015 and a 56% rise in net profit – not to mention management expectations for 14% growth in 2016 – yet the share price fell 10% following the announcement. Why? Cochlear’s board reduced the full-year dividend by 25%.Of course, in Cochelar's case several other factors were also at play and investor expectations got ahead of themselves, but a broader question remains: Why has everyone gone gaga for dividends?Franking credits make dividends particularly tax friendly in Australia. But...

If ever there were a sign that Australian investors are obsessed with dividends, this is it: Cochlear (ASX: COH) posted record sales for 2015 and a 56% rise in net profit – not to mention management expectations for 14% growth in 2016 – yet the share price fell 10% following the announcement. Why? Cochlear’s board reduced the full-year dividend by 25%.

Of course, in Cochelar's case several other factors were also at play and investor expectations got ahead of themselves, but a broader question remains: Why has everyone gone gaga for dividends?

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