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Shareholders would prefer dividends in cash
Currently, the hottest topic among investors is what form their soon to be paid out dividends will come in this year. Unlike previous years, shareholders want cash instead of shares.
Tran Tien Dung, an investor on the HBBS floor, related that at a recent shareholders’ meeting of VP Bank, only 10% said they want dividends in shares, while 90% said they want cash.
Mr. Hung, another investor, says investors prefer dividends to be paid in shares when the stock market is hot. However, due to the current slump, investors now prefer cash.
“If the market is rising, investors would rather receive shares because the value increases will bring them bigger money than a straight cash payment,” Mr. Hung said.
According to Nguyen Ngoc Truong Chinh, securities expert, over the last year, a lot of companies rushed to issue shares, which has led a drastic oversupply. It is clear that investors do not want to keep commodities which they are sure will lose value.
Mr. Chinh also said investors now want cash instead of shares because they want to inject capital in hot markets like gold or real estate.
A problem occurred when it came to light that share issuers did not have detailed plans for using the capital they raised from share issuances, and investors were not persuaded into purchasing. Garment companies planned to issue shares to raise money for real estate investments, while refrigeration firms wanted to mobilize capital to set up securities companies.
Analysts have voiced their concern that if many companies decide to pay dividends in shares, the supply of shares will again grow, and keep the market stagnant.
However, it has become clear that the list of enterprises planning to issue additional shares and pay dividends in shares in the first and second quarters is quite long.
VNN
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