It's difficult to overstate the importance of dividends to Australian investors as part of the total returns they receive.
To underline their importance, consider this. Share prices as measured by the All Ords Index have increased by 76.2 per cent since January 2004.
However, as measured by the All Ords Accumulation index, which assumes dividends are re-invested, the total return is 209.2 per cent, figures from Craig James, the chief economist at CommSec, show.
And there's even more to like with our dividend imputation system. The big banks and Telstra have dividends that are fully franked and this is particularly valued by investors paying low or zero rates of income tax.
So which companies have shares on the biggest cash dividend yields?
James says from among the 200-largest listed companies that Genworth Mortgage is offering the highest cash dividend yield of 8.81 per cent.
Cromwell Property and Sky Network, are the next-highest, both at 8.73 per cent. Seven West Media is next with a dividend yield at 8.19 per cent.
Others with dividend yields of more than 6.5 per cent include Harvey Norman, Nine Entertainment, Telstra, Growthpoint Property and Duet Group, which owns energy utilities.
More than 40 companies from among the largest-200 companies, or more than a fifth, offer dividend yields of more than 5 per cent. That's at a time when the official cash rate is just 1.5 per cent.
Of course, past performance is no indicator of future performance. Future dividends are certainly not assured.
As James points out, it's always the "total" return, the share price growth plus dividends, that should be the focus of investors, not just the dividends.
And a dividend yield can look impressive because the share price has fallen.
Telstra's share price has taken a hit recently after cut-price telco, TPG, said it would spend up big to a record-high price for mobile spectrum and announced plans to build a fourth 4G network covering 80 per cent of Australia's population.
A Telstra shareholder would have to be asking themselves if the telco's dividends can be maintained.
There's a potential trap in being attracted to a company because of its high dividends.
Many companies with the highest dividends are facing challenges.
Those challenges can be sector-wide rather than company specific, such as with the challenges facing the traditional media sector.
A high payout ratio - the proportion of earnings paid out as dividends - could be because the company cannot find good opportunities to grow their operations.
James reckons with growing doubts about the sustainability of solid growth of residential property prices, astute diversification into the sharemarket has the potential to pay off over the longer term.
But there's also the question of the outlook for the market overall. You'd have to think that shares were due for a pullback if for no other reason than share prices have risen by more than 20 per cent over the past year.
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The story More to a share investment than just juicy dividends first appeared on The Sydney Morning Herald.