Wa_ithaka wrote:I am shocked by the cry for a higher dividend from WTK. As an investor, i always treat dividends in one of three ways, as a small token of thank you for holding onto a share for some period of time or as wasted capital that could be reinvested to increase my capital gains or as an opportunity to speculate especially on shares that are known for their high dividend yield.
If one was seriously investing in WTK because of its dividend (why not the less volatile Total instead?) I can understand the noise but otherwise please give this "haki yetu, dividend yetu" maneno a rest
In this case I DISAGREE...
1) The 'usual' dividend payout has been low but ranged from 25-50% (of EPS). Even at 25%, this should be 24/-
2) The EPS is an outlier. The dividend is not. The EPS of 96/- (less biological gains + associated firms) is still very good 60/- or so. So 25% = 15/-
3) The cashflow is wonderful & expected to rise or remain steady (well, at least in 1Q 2010-11) thus WTK can afford a larger dividend.
4) According to Warren Buffet, if the firm can't generate better returns than shareholders (well, I use 12% as my benchmark) then distribute the cash. Over the years the ROE of WTK has lagged 12% or even inflation!
5) If there was a stated project that needs cash e.g. acquisition, expansion of existing plantations, new plantings, etc... I wud be OK. Nothing like that has been mentioned.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett