It'll be a long wait for a tax cut from Canberra yet there are shareholders getting one every six months.
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For all the market's nerve-racking gyrations in paper values, it's paying out record dividends, complete with one of the best tax breaks going.
That's a 30 per cent discount on your tax from franked dividends which are issued twice yearly by the banks, Telstra and many other quality stocks.
From the top 200 stocks alone, $22 billion is going out in dividends in this quarter according to CommSec's Craig James, with an embedded tax cut worth $9.4 billion from franking credits. And that's for only one six-month period.
When the market is all over the shop like this, why not close your eyes and feel the cheques?
The fact is that two-thirds of the gain from quality shares over the years isn't in the price but the dividend payments.
Ideally these should be recycled back into the market to compound the return.
Because share prices will always bob around, a reinvestment every six months means sometimes you pay a premium and other times get a discount but you'll have more shares that should grow over time.
Come to that the best way to ride a volatile market is by dollar cost averaging, which is investing a fixed sum of money at regular intervals. That way you get more shares when they're cheaper, and fewer when they're dearer, so you're never taking a big risk.
So what should you do with those dividends in a market as choppy as this?
There's a case for sitting this one out until it's clearer how China is travelling.
Trouble is the market can turn on a dime so by the time it's obviously up and running again you've missed your chance to get in at the bottom.
Besides, you can sandbag your share holdings by using your dividends to diversify into other stocks going cheap.
And it's not as if saving is much safer. It might be for a while but not over time. Record low interest rates, which could well drop further, won't even preserve your capital after tax and inflation, though paying debt off will.
Anyway when there's a stock sale, it's time to buy.
But which stocks?
The best of the bank run is behind us while the worst for the miners may already be upon us.
The banks have had it all their way because they were allowed to get away with less capital or more leverage than seems wise today. They've also been lifting profits by writing back provisions for loan losses which never happened.
New liquidity rules that are being phased in have left them capital challenged just as their bad loans are bound to pick up or, to be more accurate, stop falling as the benefits of the resources boom peter out.
Contrary to the popular view and often the impression they'd like to leave, at least with analysts, banks haven't been slashing costs that much. They might be skimping on staff but costs have been rising by more than inflation as they spend up on technology.
Thanks to recent capital raisings, dividends will have to be spread more thinly over more shares. At the same time the banks' payouts relative to profits will be historically, and imprudently, high because of all those extra shares. Eventually they'll struggle to hold their dividends, let alone lift them.
At least there's no pent-up selling pressure. Bank stocks might have been too bubbly a few months ago but nobody says they're overvalued now.
Besides, all those super funds that bought bank shares three years ago are earning yields – the return from a dividend taking into account the cost of the shares – of 12.5 per cent a year after franking. How good is that?
Oh, I know. Anybody who bought CBA in the first tranche float are earning, wait for it, 111 per cent a year in dividends alone. Why would they ever want to sell?
Still, envy aside, you can hardly complain with yields around 9 per cent after franking thanks to the recent price plunge.
The big miners are going through a rough patch, but at least they're among the world's lowest cost producers and have strong balance sheets.
In fact the biggest dividend payer isn't a bank but BHP Billiton. Not only that, along with Rio Tinto, it's one of the few stocks to promise to at least hold and try to lift its dividend each year.
BHP is yielding 10.4 per cent after franking, though like the banks that's due more to the fall in its share price than the rise in the dividend.
Instead of picking a particular stock you could always buy the whole market with a listed or unlisted pooled fund. It'll follow an index like the ASX200.
Again, the trick is to apply dollar cost averaging so you're never too exposed.
