Tis the season for dividend giving
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Christine St Anne is Morningstar's online editor.
Bank dividends have been among one of the few positive investment outcomes in the current market. For many investors, their attractive yields have soothed investment portfolios impacted by a volatile environment.
For Westpac (WBC) chairman Lindsay Maxsted, dividends could also provide the bank's shareholders with a way to give back to the community.
His comments followed the launch of Westpac's dividend donation plan at its annual general meeting (AGM) this month.
The donation plan will allow shareholders to donate a percentage of their dividends that will go to a number of charity foundations managed by the bank.
Shareholders who participate in the dividend donation plan will just have to specify what percentage of each dividend-per-share they would like to donate.
Donations over $2 are tax deductable and shareholders will keep any available franking credits.
"Most of our shareholders give to charities. By giving a portion of their dividends to these charities, they can also put back into the community. We are very proud of our charity foundations," Maxsted says.
Charitable foundations overseen by the bank include the Westpac Foundation, the St George Foundation, the Bank of Melbourne Neighbourhood Fund and the Bank SA & Staff Charitable Fund.
These foundations support a number of initiatives including commercial activities that tackle poverty, mental health and long-term unemployment and support local community programs particularly at a grassroots level.
ANZ (ANZ) and the Bank of Queensland (BOQ) are two other banks that also run dividend-giving programs.
The ANZ shareholder dividend charity donation program gives its shareholders the opportunity to donate some or all over their cash dividends to the bank's shareholder community partners.
Last year, ANZ raised more than $78,000 in donations through the program.
The Bank of Queensland also has a similar program. The bank's shareholders can put some or all of their dividends to the Children's Hospital Foundations Australia - a partnership between five major children’s hospital’s in different states.
The power of one
With the quest for yield, it is understandable that retirees may be forgiven for wanting to hold onto as much income as they can. Westpac's dividend donation plan, however, gives shareholders the flexibility to donate even 1 per cent of their dividends.
For example, Westpac will pay its final dividend of 84 cents per-share this week. Under the plan, shareholders can donate a minimum of 1 cent (rounded up from .84 cents) per share to a Westpac charity.
It is as a simple strategy that is aimed to leverage the involvement of more shareholders, according to Westpac senior manager of investor relations Hugh Devine.
"The idea is to ask all our shareholders to think about giving a little each, rather than the generous few who give a disproportionate amount," Devine says.
"If each of our shareholders donated a minimum of 1 per cent or more, this would still generate a significant amount of funds for our foundations," he says.
Indeed, as Maxsted noted at the Westpac AGM, with more than 560,000 shareholders, the power of one shouldn't be underestimated.
"If shareholders choose to donate even 1 per cent of their dividends, together they can make a significant difference to people's lives," he says.