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Dividends: Shareholders prefer cash to shares
The dividend paying season kicks off now. Unlike previous years’ shareholders’ meeting, where the dividends in shares were applauded, shareholders nowadays only want cash.
Re-investment plan? No!
The shareholders’ meeting of a construction company held late last week lasted an hour more than previously planned. The 500-seat meeting hall was fully occupied, while the shareholders, who could not find a seat in the hall, had to watch over the meeting through the two big screens.
The meeting was kept in peace until the shareholders heard that the management board intended to use 60% of the company’s profit for re-investment. The re-investment plan faced the protest from shareholders, who demanded to divide all the profit instead of reserving for re-investments.
Though the company’s chairman tried to explain that the company needs re-investments to further develop, shareholders still insisted that they need dividends, because they have suffered losses, and dividends are really the ‘only consolation’.
Hung, a shareholder who attended the meeting, strongly protested the re-investment plan suggested by the management board. Hung said that he has become an unwilling shareholder of the company. He was a ‘surfing investor’, who planned to buy shares one day and sell shares the other day. However, as the stock market keeps falling down, he still cannot sell the shares he bought. Therefore, he wants to get as much money as possible from dividends.
The same situation also could be seen at the Khanh Hoi Import-Export Joint Stock Company’s shareholders’ meeting. Shareholders strongly protested the re-investment plan suggested by the management board.
Representatives from the company said that the company’s shareholders only want to get cash, because they are ‘surfing investors’, not long term investors, and they do not care much for the long term development of the company.
Dividends in cash? Yes!
Unlike previous years’ shareholders’ meeting, where the dividends in shares were applauded, shareholders nowadays only want cash.
A shareholder of REE, who just attended the shareholders’ meeting, said that he initially planned not to attend the meeting, but he then changed his mind, because he heard that the management board may pay dividends in shares (40%) and he needed to attend the meeting to protest the plan.
He said that he does not want shares because shares prove to be unattractive now when the stock prices keep decreasing.
A securities expert in HCM City also said that paying dividends is really not attractive at this moment. He added that companies should pay dividends in cash unless they have attractive investment projects.
However, despite the strong protest from shareholders, most of the companies still follow the initial dividend paying plans.
VNN
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