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The Age: Banks cutting dividends a cruel prospect for retirees

Plato Investments managing director Don Hamson has urged the big four banks to keep paying dividends to investors, warning that older investors could be “hung out to dry” if the banks cut yields.

With the Australian Prudential Regulation Authority teling banks last week to ‘seriously consider’ suspending decisions on dividend payments until the full economic toll of the coronavirus outbreak is understood, Dr Hamson said the lenders could use underwritten dividend re-investment plans to offer certain shareholders discounted shares instead of cash payouts.

“This allows the company to completely preserve its capital as well as paying dividends to those who rely on the income to make ends meet,” Dr Hamson said.

“Destroying the major income stream of thousands of Australians, many of whom are retirees, will put further strain on the economy, which we believe will fall into a deep recession in the June quarter of 2020.”

Click here to read the full article in The Age