Wesfarmers Ltd (ASX: WES) shares were among the companies that announced special dividends during the August earnings season.
Most ASX dividend-paying shares make two payments to investors per year — an interim dividend and a final dividend.
However, company boards can decide to pay a special dividend if profits were particularly robust during the recent period.
Companies may also pay special dividends if they have excess cash that isn't required for day-to-day operations or upcoming investments.
Special dividends can also be used to return one-off proceeds from asset sales or a capital restructuring.
Sometimes, companies simply want to reward their shareholders for their loyalty.
Special dividends are typically non-recurring, signalling that the payment is outside the company's normal dividend policy.
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Dividends higher than expected during earnings season: broker
In a new note, top broker Macquarie said there was a +15% surprise on declared dividends during earnings season.
In other words, analysts had a consensus expectation of lower dividends.
The broker said:
The positive surprise on dividends is +15% was largely driven by the stronger earnings, but is slightly higher suggesting an increase in payouts.
The solid DPS beat suggests an improving outlook in contrast to generally conservative guidance.
Companies that announced special dividends or buybacks tended to outperform.
Investors are often pleasantly surprised by a special dividend, given that company boards usually do not flag them ahead of time.
This is why some of these ASX shares experienced stronger price bumps, as Macquarie mentioned, after their reports were released.
6 ASX shares paying special dividends this season
Let's take a look at some of the ASX shares that will pay special dividends this earnings season.
Wesfarmers Ltd (ASX: WES)
The Wesfarmers share price is $88.44 at the time of writing, down 2.68%.
Wesfarmers announced a final dividend of $1.11 per share and proposed a capital management initiative of $1.50 per share.
Subject to approval, this would be comprised of a capital return of $1.10 per share plus a special dividend of 40 cents per share.
JB Hi-Fi Ltd (ASX: JBH)
JB Hi-Fi shares are trading at $114.12, down 1.56% today.
The ASX retail share will pay a special dividend of $1 per share and a final dividend of $1.05.
Qantas Airways Ltd (ASX: QAN)
The Qantas share price is 0.13% higher on Tuesday at $11.51.
The ASX airline share will pay a special dividend of 9.9 cents per share and a final dividend of 16.5 cents.
Super Retail Group Ltd (ASX: SUL)
The Super Retail share price is 1.16% lower on Tuesday at $18.36.
Super Retail announced a special dividend of 30 cents per share and a final dividend of 34 cents.
ARB Corporation Ltd (ASX: ARB)
The ARB share price is $38.74 at the time of writing, down 0.92%.
The ASX retail share will pay a special dividend of 50 cents per share and a final dividend of 35 cents.
Nine Entertainment Co Holdings Ltd (ASX: NEC)
Nine Entertainment shares are trading at $1.71, down 2.45% today.
The TV network owner announced a special dividend of 49 cents per share and a final dividend of 4 cents.
Foolish Takeaway
If you want to buy an ASX share while its latest dividend is still attached, you need to purchase it before its ex-dividend day.
You can check out a list of 30 ASX shares going ex-dividend this week here.
You can also check out which 8 ASX shares got the best price upswings after their results last month.
