Westpac On Dividend Flow

Westpac note that while big resource earnings reports have been dominated by surging costs, impairments, and the closing of activities, “declared dividends have actually come in slightly above our expectations.”

• “Indeed, our estimate for the flow that will be generated from Australian dividends that are declared in US$ and will show up as FX conversions, as investors request payment in local currency for H1 this year, sits at A$12.25bn versus an initial estimate of A$11bn.”
• “While that would be the weakest half since H2 2021 it is fairly concentrated with about A$4.78bn of that being transacted as soon as this week and an estimated A$6.4bn in the first full week of March according to stated dividend policy, reasonable assumptions and calculations.”
• “It’s hard to find evidence that this flow causes the A$ to move if the US$ for instance is rising strongly. However, information on the flow tends to closely watched by the leveraged community and we remain of the view that it can impact the A$ if other fundamentals factors are less potent.”
• “Bottom line, this flow should be more supportive for the A$ in the near term.”