👉 Background: REA Group is a global real estate advertising company founded in Melbourne back in 1995. It's the group behind Australia's biggest property website Realestate.com.au (the place where you go to dream about houses completely out of your price range 💭)

👉 What happened: REA Group has delivered some monstrous results over the last financial year. The company's revenue is up 26% year on year to $1.17 billion and net profit increased by 25%. Nice going, REA.

👉 What else: But that’s not even the most impressive part. REA Group posted a record final dividend payment of 89 cents a share… and better yet, it’s fully franked.

What's the key learning?

💡 When a company pays out a dividend to its shareholders, it’s distributing a portion of its profits back to its owners. Of course, companies that generate profit will needs to pay the ATO for this.

💡  So, if a company has already paid 30% tax on on this profit before paying out the dividends, then it would be unfair to make the shareholders, pay tax on the profit again when it arrives as a dividend. That's why the government brought in something called franking credits way back in 1987.

💡Franking credits are credits for the tax that’s already been paid on dividends. If you get your hands on a fully franked dividends (like REA Group), you’ll get a 30% tax credit for your personal income tax. One of Dick Smith's favourite (yet most hated) tricks!