The All Ordinaries has been an underperformer in terms of capital gains. But it has been an outperformer in terms of dividends. Investors have been able to get strong yields from dividends so have not needed the share prices to rise to get returns. In a sense, the ASX has become like a hybrid exchange: somewhere between a share market and a income paying security.
The Age is noting that the dividend strength should continue:
"Income-seeking investors are big winners from the profit reporting season as the leading companies lift their dividends.
Commonwealth Bank, CSL, and Suncorp have lifted their full-year dividends by more than 10 per cent from the previous financial year. Telstra, BHP Billiton, Rio Tinto and IAG have also delivered sizeable dividend increases so far during the August reporting period.
"It really does not get much better than this if you are an income-seeking investor in the market," says Elio D'Amato, chief executive of shares researcher Lincoln Indicators."
The dividend yields are between 3-6%, which compares very favourably with the cash rate:
These dividend yields have been the escape route for Australian investors post GFC. Such strong returns have not been available to investors in other countries in the OECD. Australia has been the lucky country.
Economist Shane Oliver says the signs are looking good for profits:
"Shane Oliver, the chief economist at AMP Capital Investors, says while it is dangerous to draw any firm conclusions before the reporting season is complete it does look like Australian companies, overall, are doing well.
He says about 70 per cent of companies have seen their profits rise from a year ago. The proportion of companies increasing dividends, so far, is about 67 per cent, which compares with an average of just under 60 per cent in recent years, Oliver says.
The strongest profit rises are coming from the resources sector, particularly Rio, and the big banks continue to do well, particularly the Commonwealth Bank. Sectors outside of financial service and resources, such as retail, are not doing so well.
"The June quarter was not very good for retail sales and they were some profit downgrades in the run-up to results [season], particularly from the retailers," Oliver says.
Brian Eley, the co-founder of small companies specialist Eley Griffiths Group, says profit growth appears to have come mainly from cost cutting and margin improvement with "revenue growth still quite elusive".