QUOTE(wil-i-am @ Oct 11 2013, 10:42 AM)
From the past, they will pay dividend from the current year earnings
They will c/f a small % of current year earnings to retained earnings
The retained earnings will act as buffer in case of rainy days ahead
Thanks.
Roughly, how much do they keep aside? If it is a small amount, 0.1, 0.5%, I don't mind. If it is 2% or more, I would prefer to get the $ now rather than they keep it for rainy years. Looks nice on paper with steady dividends but I still think I will gain more without this artificial cap.
E.g. dividends for 5 yrs
case 1
1 billion keeping 0.2 billion as retained earning
1 billion keeping 0.2 billion as retained earning
1 billion keeping 0.2 billion as retained earning
1 billion keeping 0.2 billion as retained earning
bad year 0.5 billion plus special 0.8 billion dividend (from past retained earning)
case 2
1.2 billion
1.2 billion
1.2 billion
1.2 billion
0.5 billion
In absolute term, the amounts are the same in the 2 cases. But I prefer to get the $$ earlier on compound interest perspective.
We don't get compounded interest on retained earning in EPF, right?
Cheerio.