The polls had been saying for months that Labor would win the Federal Election, but the surprise result could see investors respond on the ASX.
Here are three ways things could change today and in the short term:
Special Dividends To Slow To Normal
After a flurry of special dividends over the past six months, we’re unlikely to see many more in FY19 for the sake of releasing franking credits.
Just last week iron miner Fortescue Metals Group Limited (ASX: FMG) decided to pay a special dividend to benefit shareholders.
It struck me as a little odd why businesses didn’t wait until at least the Monday after the election to decide if they were going to pay a special dividend or not.
High Yield Shares To Make A Comeback
Investors have been worried about shares that pay out larger dividends because they might lose the benefit of their franking credits. Shares like Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), WAM Research Limited (ASX: WAX) and Argo Investments Limited (ASX: ARG) could all bounce today.
Fundamentally, having franking credits won’t change the underlying performance of the businesses, all it will do is retain the taxation advantages that Australian investors enjoy.
Non-Franked Shares To Suffer, Maybe
investors may have preemptively been buying shares that don’t offer franking to make up for the loss of yield, so that trend could reverse.
Some non-franked shares that investors may have liked could have been Scentre Group (ASX: SCG), Transurban Group (ASX: TCL), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Vicinity Centres (ASX: VCX).
What To Do now?
Ultimately, I’m not going to change how I invest based on the election. I invest for the long term – if I get franking credits as a bonus then that’s good, otherwise I would have been fine under Labor’s proposed system too.
Either way, I think investing for growth is the best thing to do for the long term, which is why I like the idea of the two rapid growth shares in the free report below.
[ls_content_block id=”14947″ para=”paragraphs”]
[ls_content_block id=”18457″ para=”paragraphs”]
