Everyone is an investor these days it seems, never before have terms like franking dividends, pivot point, diversification portfolio, and stock screeners been so commonly heard in cafes, bars, and offices around the world. Thanks to new and exciting technological capabilities, everyone can now be an investor and take advantage of some of the lucrative benefits like franking dividends for themselves in their everyday investment strategies.
The platforms that are now simple to download and easy-to-use are everywhere and allow everyday investors to have a look at the market in ways that were once reserved for the stockbrokers and elites.
Tools like stock screeners and charts have allowed people to watch the stock market move in real time, and discords and forum pages dedicated to stocks paying franking dividends, people are now making smarter investments with their money and creating a portfolio in their own time.
This article will be going over a few of the reasons why all types of investors should be looking toward franking dividends as a potential flow of additional funds, and why they’re so in demand by some of the wisest entrepreneurs and business minds of today.
What Is Meant By Franking Dividends?
Simply put, when a company that has had a profitable year decides to section off a slice of the profits for their investors, the payment itself is usually counted as taxable income for the recipient. However, as the company has paid their taxes on the profits already, this translates to a potential double-tax situation for the money.
This is where the illustrious credits scheme comes in, essentially, franking dividends come with a credit that goes straight to the ATO that alerts them of the taxation being applied on the payment. Therefore, the recipient of the franking dividends will have a credit to use when filling their tax return for the year that eases the pressure at tax time and could potentially turn a little profit if the cards are played right.
A number of decent companies offer franking dividends, it comes down from company to company who pay yields on their profits so it will often come down to the investor doing a little bit of research. Luckily with the internet there’s a lot of resources available.
Why All Investors Should Be Looking For Them
So, why should a newbie investor even care about them? Not only does the tax-time relief provide a lovely cushion for the savvy investor, they also potentially give some form of rebate if left unused. Australia has a unique method of dealing with the unused credits of franking dividends in that they simply refund the amount if they’re left unused.
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Many of the largest shareholders and business leaders in the country have taken advantage of this particular system and now the power is undoubtedly in the people as well. This article is not meant to be financial advice, more an exploration into a concept that has eluded Australian investors for too long.