pa31 I make no apologies for it being degrading and it should be degrading. Thank you, however, for being objective about it - very Bezos of you.
The world's greatest products are being invented in the US and Canada - countries where standard business policies are to reinvest the vast majority of earned capital into growth. Only by growing can you ever keep your dividend stable or increase it.
Let's take Apple as a classic example. This business didn't stop innovating after inventing the first iPhone and then rest on its laurels by paying out 100% of its profits as dividends. They kept improving their product and adding new verticals - wearables, services, improved Macs, tables, and soon VR/autonomous driving. Google didn't stop at Search - it knows not to rest on its laurels, so it bought YouTube and is expanding into the Cloud.
In Canada, banks haven't cut their dividends in 60 years and they had real-time payments since the 2000s. Canadian lenders keep sensible payout ratios of 40-50% and reinvest the rest for growth or keep it aside as T1 Capital. No Canadian lender cut their dividend during 2020; it was so embarrassing to see our Big Four squander so much capital away as dividends in preceding years that they then had nothing to give to shareholders during the pandemic.
Westpac had to eliminate its dividend for a time. NAB meanwhile stole money from shareholders by conducting a buyback at the bottom and repaying that same capital it raised, and paid fees on back, to investors. Smart. And these people have "degrees" and operate in a "highly competitive environment for talent".
Meanwhile, in Canada, all banks raised their dividends from already record levels, led by a 25% hike from the Bank of Montreal. No wonder NAB needed to go to Canada to find a half-decent steward of shareholders capital, because in Australia Macquarie and CBA are hogging all the good ones.
Meanwhile, the WBC shareholders will look at this post, arrogantly smirk, and say: "But the dividend is high." What good is a high dividend if it's offset by losses in capital? What good is a dividend if it stops a business from reinvesting in growth and sees its competitive position diminished away by attackers and incumbents?
Westpac is an awful, awful bank, and mark my words, in 50 years it won't exist. It will have to merge with ANZ or NAB. But the King's, Elliott's, and McEwan's of the world would have taken their bonuses and pensions long before then while leaving you with a broken retirement.
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