If there's one thing likely to boost our sharemarket over the next few weeks, it's the estimated $19 billion of dividends expected to be paid to shareholders.
However, it's smaller than last year's monster $24.7 billion, thanks to a smaller contribution from resources and energy shares this year.
Much of that is likely to find its way back into the market at some stage – although a large portion will automatically be reinvested in new shares through the dividend reinvestment plans (DRPs) run by many companies.
The payouts begin next week, including from three of our largest companies, Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS). That includes $3.4 billion from CBA for its $1.98 dividend per share, $1.9 billion from Telstra from its 15.5 cents per share interim dividend and $1 billion from Wesfarmers for its 91-cent dividend.
Add in Woolworths Limited (ASX: WOW) and its 44-cent dividend, and the four companies will deliver more than $6.9 billion to shareholders. They obviously aren't alone with many more companies expected to pay out dividends in the next few weeks.
Commsec says just under half of the $19 billion will be paid out to shareholders in the week after Easter, with a further $4.7 billion scheduled for the following week, and the remainder in the two weeks after that.
If the dividends don't find their way back into the market, they could find their way into the hands of retailers and service suppliers – which would also be a welcome boost to the economy.
Foolish takeaway
For many investors yet to hit retirement, their best bet is to reinvest those dividends back into the market and let the power of compounding do its job.
