Current Status: ANZ Bank Dividends and Franking Credits
For long-standing investors, the tradition of receiving fully franked dividends from ASX 200 bank shares, particularly from the big four, such as ANZ Group Holdings Ltd, has been an anticipated norm. Notably, ANZ has been a generous provider of these dividends until some recent fluctuations were observed.
Recently, ANZ’s dividend yield stood out amongst its peers, with a notable 6.04%, surpassing the likes of Westpac Banking Corp and the Commonwealth Bank of Australia. However, a shift in the status of their dividends’ franking credits has sparked discussion within the investment community.
A Historical Perspective on ANZ’s Dividend Franking
- In 2019, ANZ announced a partially franked final dividend at 70%, deviating from its history of fully franked dividends.
- The change was attributed to the company’s evolving business structure and the performance of non-Australian operations, which are not subject to Australian taxes and therefore do not contribute to franking credits.
Despite a return to fully franked dividends in subsequent years, 2023 marked another year of change.
Franking Credits in 2023 for ANZ Dividends
- ANZ’s interim dividend in July 2023 was fully franked at 81 cents per share.
- However, the final dividend declared in December was partially franked to 65%, aligning with the interim dividend in value but not in franking percentages.
- A special, unfranked dividend was also announced, potentially to offset the lower franking rate on the final dividend.
The divergent franking levels are seemingly a result of the bank’s diverse geographic earnings and the impressive performance of its New Zealand operations and international institutional business.
Outlook on Future Dividend Franking
Given the structural implications of ANZ’s earnings base and its international business ties, investors may need to adjust expectations regarding fully franked dividends in the foreseeable future.
Establishing a resilient investment strategy may involve accommodating the variability in dividend franking, as the recent pattern suggests a shift away from the long-standing practice of providing fully franked dividends.
Understanding the influence of global operations on dividend franking rates is crucial, with ANZ Bank’s situation underscoring the broader effect of an international footprint on shareholder returns.
Final Thoughts: Assessing Dividend Franking Policies
When evaluating potential impacts on one’s investment portfolio, recognizing the shifting landscape of ASX bank dividends is essential. In light of ANZ’s recent announcements, staying informed about the bank’s forthcoming financial policies will be vital for those invested in or considering bank shares like ANZ.
Investors should consider the evolving nature of such policies in their broader investment context, preparing for alterations that may arise from corporate strategies and international market dynamics.
While the future of dividend franking might hold uncertainty, understanding the intricacies of what drives these changes can provide a firm grounding for making informed investment decisions.