Dwelling on dividends
I FOUND the sentence “A dividend is a wonderful thing” in Vic de Klerk’s report headlined “Wonderful value” ( 17 July) very interesting. The following are a number of random thoughts it led me to. The goal of a business is/should be to earn a profit so that its owners can earn an income. But it’s obvious the business may need to use its profits during an initial or expansion phase. However, how long will companies such as Naspers and MTN remain so stingy with the income they pay to their owners?
Retired people who need an income hold many shares directly or indirectly. People who haven’t retired yet may also prefer to receive cash and decide for themselves where to reinvest the money. If dividend distributions are stingy it could inconvenience some people into selling portions of their investment from time to time.