The $7 billion plus special dividend pressie from our biggest miner that's firing up the BHP Group Ltd (ASX: BHP) share price will also prompt investors to ask who's the next capital return superhero on the ASX.
There's good news on this front as we may have a few possible candidates to form our own The Avengers team.
UBS and Macquarie Group Ltd (ASX: MQG) are predicting that ASX-listed companies will be undertaking more capital returns in 2019 ahead of the changes to franking credit refunds that the federal Labor party is promising to implement if it wins the next election, according to the Australian Financial Review.
Capital return candidates
What's interesting is that both brokers have picked supermarket giant Woolworths Group Ltd (ASX: WOW) as a likely capital return surpriser thanks to its large pool of franking credits and its surplus cash to business requirements.
The company is likely to announce an off-market share buyback once the $1.7 billion sale of its petrol station business is completed next year.
The divestment of Colonial First State by Commonwealth Bank of Australia (ASX: CBA) also means that our biggest bank has room to return cash to shareholders either through share buybacks or a special dividend, according to Macquarie.
However, I think the chance of this could be hurt by the Reserve Bank of New Zealand's proposal to lift the capital requirements of banks operating in its jurisdiction, although CBA is seen to be the least impacted of the big four banks.
Meanwhile, UBS believes that Wesfarmers Ltd (ASX: WES) will announce an off-market share buyback in the first half of 2019 unless management can find a worthy acquisition following the spin-off of its supermarket division into the newly listed Coles Group Ltd (ASX: COL).
I think fuel retailer and supplier Caltex Australia Limited (ASX: CTX) could be added to the capital return team as well given that it holds the second largest franking credit balance relative to its market cap of all ASX large cap stocks.
Like Wesfarmers, Caltex is said to be on the prowl for acquisitions but management may opt to keep shareholders happy in the nearer-term if it can't find an earnings accretive target to buy.
Franking credit release
There are two key ways for companies to release excess franking credits on their balance sheets. They can do that via an off-market share buyback tender, just like the one BHP has just completed, or they are pay a special fully franked dividend.
The Woolworths share price is up 0.8% to $28.53 in after lunch trade, while the Wesfarmers share price is 1.7% higher at $31.82, the Caltex share price is 1% stronger at $27.11 and CBA is up 0.7% at $69.26.
In contrast, the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is up 1% after falling 0.3% into the red during morning trade.
