Dwelling on div­i­dends

Finweek English Edition - - Letters - JO­HANN SÖHNGE Via email Let­ter short­ened - Ed

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.

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