Like, if a company is paying franked dividends, that indicates that it's liable for and paying taxes. Which, to my limited understanding (and this is what I am trying to clarify) suggests that the dividend is being paid out of the company's genuine profits, not reserves (nor going into debt to pay dividends). Which (to my understanding), indicates that the company is genuinely making a profit.
I'm no expert, so am I missing something? Under what circumstances would it be wise for a company to pay a dividend, even if it cannot frank it?
And if a company is franking the dividend, is this in fact a good sign of a healthy company? OR, are there circumstances where a company can make significant, genuine, yet tax-free profits, and thus have no franking credits to attach to a dividend payout of said profits?
As always, please be kind. Particularly as (as my post count indicates), I am still something of a novice here.
