"If we could compare amc with an Australian equivalent, which pays tax in Aus, should I value the Australian equity at a higher relative multiple than amc?"
I'm guessing this relates to the respective dividend streams being franked, or not, as the case might be.
In pure valuation theory, yes, you should make an adjustment for the net present value of the franking credits, but - in practice - valuations that we use for investing purposes are not even close to being precise.
In fact, when we conclude, for example, that AGL is a buy because it is trading on a P/E of 15.0x, there is so much error in that statement - forecast error in the "E", as well as subjectivity error in terms of what the appropriate ratio of "P" to "E" should be.
As such the degree of accuracy implicit in valuing franking credits is by far subordinated to the other much more material valuation errors we make.
(Remember: just as a chain is only as strong as its weakest link, a valuation number is only as strong as the weakest assumption used to derive such a valuation).
So, really, if you want to make a distinction between valuations that respectively exclude, and include, franking credits, it would be akin to saying something along the lines of:
"If in the case of the former (i.e. no franking credits) a P/E of 15.0x applies, then when franking credits are .included, the equivalent P/E becomes, possibly, 15.3x."
That's my sense of the modest extent of the difference.
But, as you can hopefully sense, that difference is well within the usual margins of error in valuing listed securities.
Which is why - while all things being equal, I would prefer to receive franked dividends where I can get them - I personally don't explicitly factor them into the stock valuations I make. And I suspect that not many people would do so.
Coincidentally, out of interest I just a few weeks back checked on the degree of franking in the distributions/dividends I receive. A little under 20% of the income generated by my portfolio is un-franked.
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