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Speaker 1: You're listening to a shareses podcast. Australia has a strong

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Speaker 1: dividend culture. Why do you think income is such a

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Speaker 1: central feature of our market and what value does it

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Speaker 1: play in terms of a long term portfolio?

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Speaker 2: So, I mean, you obviously got the franking system within Australia.

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Speaker 2: So obviously the offset the taxi company pays you individual

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Speaker 2: investor can offset that against their own tax return from

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Speaker 2: the distribution of fully franked dividends. So the structure of

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Speaker 2: the Australia market is such the return of value back

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Speaker 2: to shareholders is waged to some extent through fully franked

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Speaker 2: dividend income. If you look at the US market, they

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Speaker 2: tend to have a system where they buy back shares

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Speaker 2: to try and get the vay of the shares underlying

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Speaker 2: shares up. People have to sell their shares to actually

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Speaker 2: generate some income if you want to call it that

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Speaker 2: from capital gains. So we think the Australian system is

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Speaker 2: a really good one. You think it's fair that if

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Speaker 2: a company's paid tax, it should be offset against in

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Speaker 2: the hands of individual investors. So and we thought long

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Speaker 2: and hard when there was some talk about changing the

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Speaker 2: franking system many a few years ago, back in two

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Speaker 2: thousand and nine, and now about trying to maintain that system.

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Speaker 2: If you look at the structure of the investors that

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Speaker 2: are in the market, you've got self managed super funds,

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Speaker 2: You've got people who can actually develop their portfolios to

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Speaker 2: take advantage of income, and that's the way I think

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Speaker 2: that the Australian market has developed. Also, the other thing

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Speaker 2: is you don't necessarily have to take the income. You

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Speaker 2: actually can reinvest back into the stieres through the din

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Speaker 2: and reinvestment plans and those sorts of things, so you

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Speaker 2: can actually continue to build up your holding within a

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Speaker 2: particular company through that sort of activity and still get

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Speaker 2: the benefit of franking credits. If I get back to AFIC,

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Speaker 2: I mean any tax that we pay we can pass

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Speaker 2: through as fully franked dividends or fully franked income. Also,

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Speaker 2: the franked incomes that we receive from the dividends and

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Speaker 2: companies that we hold actually just flow straight through to

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Speaker 2: the end investor through through the dividends that we supply.

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Speaker 2: The listed investment company structure allows you to reserve not

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Speaker 2: just only retain profits, but franking credits. So for example,

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Speaker 2: through COVID, when the market cuts dividends, by about twenty

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Speaker 2: five percent. AFRIC was able to maintain this dividends through

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Speaker 2: that period, so the advantage for a listed investment company

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Speaker 2: around franking is really strong. So I think it's inherently

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Speaker 2: that the tax system as such has meant that dividends

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Speaker 2: are very much part of the Australian market. Some companies,

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Speaker 2: it takes a bit of convincing for them to recognize that,

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Speaker 2: and ultimately it's a balance for them about whether they

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Speaker 2: reinvest back in the business to generate stronger returns or

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Speaker 2: whether they pay it out as as fully franked income.

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Speaker 2: I think the other point to make is that Australian

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Speaker 2: investors are a lot of retail investors are reasonably sophisticated.

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Speaker 2: If a company comes back to them and says we've

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Speaker 2: got this great idea, they're more than happy to put

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Speaker 2: the money back in because they have that history of

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Speaker 2: getting those good dividends and income from their company over time.

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Speaker 2: I think dividends also provide a level of capital discipline

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Speaker 2: on companies as well.

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Speaker 1: Investing involves the risk you might lose the money you

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Speaker 1: start with. We recommend talking to a licensed financial advisor.

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Speaker 1: We also recommend reading product disclosure documents before deciding to invest,