Corporate payouts in Australia

Abstract

Kahle and Stulz (2021) find that inflation-adjusted corporate payouts (dividends and repurchases) in the US are three times larger over the period 2000–2019 (post-2000) compared to the 1971–1999 period (pre-2000), and that the growth in the payouts comes from repurchases instead of dividends. We investigate the corporate payouts in Australian equity markets with a dividend imputation system and find that the payouts increase by almost 80% from the pre-2000s to the 2000s. Unlike in the US, the payout increase is largely driven by dividends instead of share repurchases in Australia. Similar to the US, Australian top payers have also become bigger, older, more profitable, and have more free cash flow in the 2000s than before. Moreover, top Australian payers pay out more of their free cash flow, since they spend less on capital expenditures.