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· Posted on
February 21, 2024

Baby Bunting profits are up - and so are dividends

Happy Valentine's Day to all the Baby Bunting shareholders. In lieu of roses, there are dividends.

What's the key learning?

  • Baby Bunting had a stellar start to the 2022 financial year, with total sales for the first 6 months up 10% on the same period last year
  • Baby Bunting's shareholders are set to receive a fully-franked dividend of 6.6 cents per share for the first half
  • A fully-franked dividend is where a company makes a profit, pays tax on that profit and then pays a dividend to shareholders from the profits left over.

Background: Baby Bunting is Australia's largest baby goods store. It sells prams, bouncers, booster seats...you name it. In 2015, the company went public.

What happened: The baby lords have had a stellar start to the 2022 financial year. Total sales for the first 6 months reached $239.1 million (up 10% on the same time the previous year).

What else: With net profits after tax also up 12.2%, Baby Bunting's shareholders are set to receive a juicy...chunky...fully-franked dividend of 6.6 cents per share for the first half 🤤🤤.

So what's the key learning?

💡There are two main ways a company can pay a dividend: a fully-franked dividend...and an unfranked dividend.

💡Let's break it down:

  • An unfranked dividend is where a company makes a profit, hasn't paid tax on that profit and then pays a dividend to shareholders.
  • A fully-franked dividend is where a company makes a profit, pays tax on that profit and then pays a dividend to shareholders from the profits left over. FYI, shareholders also pay tax on dividends.

💡However, when your dividend is fully-franked (like Baby Bunting's) it comes with a franking credit. This offsets the tax the shareholder would pay (because the business has already paid it) and reduces your taxable income.

‍

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All information contained in the Flux app, www.flux.finance, www.joinflux.com, app.flux.finance and any podcast of Flux Media Pty Ltd (ABN 27 639 804 345) is for education and entertainment purposes only. It is not intended as a substitute for professional financial, legal or tax advice. Flux Media Pty Ltd is the owner of the registered trade mark, 'What the Flux'. While we do our best to provide accurate information on the podcast, we accept no responsibility for any inaccuracies that may be communicated.
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