Best of both worlds

Financial commentators are clanking on again about the benefits of capital gains instead of dividends under the new tax regime. Sell the dividend payers and buy the growth stocks they cry. This would have more merit if they could guarantee profits in the murky markets.

But why not have both? Wesfarmers, which pays out 100 per cent of its earnings in dividends, saw its share price hit a record of over $19 last week, valuing the diversified group at more than $5 billion. It now ranks 29th among our biggest companies.

This week shareholders in Franked Income Fund, which exists to vacuum up those dividends, got what amounts to a scrip-based takeover from Wesfarmers valuing their holdings at $7.85 a share.