Scott Phillips

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1,587 appearances 2 recordings 1 series first heard Jun 2022 last heard 31 Aug

Scott Phillips’s voice in public audio — every appearance, attributed to the second.

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Australian Finance Podcast · 📈 Investing for income: dividends & passive income · 2 Jun 2022 podcast

The other advantage that shares offer is that no other asset class does.

is franked dividends the tax benefit you get the tax credit you get from the ato because companies have already paid tax on the dividends they're paying to you so if you get 100 bucks in dividends from a company that's already paid tax on that the government says we're not going to tax you twice you have to pay tax but i'll give you a credit for the tax the company's already paid and that can offset your personal taxation what that means is if you get say number four percent

in dividends as a fully franked dividend, that's worth about 5.5% give or take to maybe closer to 6% to me after those tax benefits.

So if I get 4% rental yield or 4% interest in the bank, you're not going to get either probably, but if you did, and 4% from shares, they all look the same, but the tax advantages of fully franked dividends is massive and normally underappreciated by most.

2019, yeah.

So historically speaking, and even as we speak now, if you look at the total return of the ASX, it's about 10% a year.

Super variable, of course, super volatile.

It's been great years.

It's an ordinary year.

But over a very long period of time, about 10% is the average return you get from shares per annum.

Of that 10%, about 4% tends to come from dividends.

I think the average ASX 200 yields a little bit more than that, but close enough to call it that.

So as you say, every $10 worth of return that shares gives you, just under half or four of those $10, 4% of that 10% comes from dividends.

The other part comes from capital growth.

And

Again, not every company, right?

Some pay dividends, some pay higher dividends and have lower capital growth.

Thanks for a great example.

NAB has actually gone backwards share price-wise over the last five years, even dividends.

So you've got to be careful about how you weigh those two together.

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