Hi, wanna share this article from the star with you guys. Sorry if you have seen it. I normally don't buy stocks upon getting tips from newspapers as by the time you get the tip from the newspapers, everybody is buying and would be overpriced already, but i did buy some Wellcall stock upon reading this article.

They seem to have a big pile of cash and don't seem to have any plans to dowerseify with it so they give the majority of their earning to the shareholders in the form of dividend. For the first half of this financial year, they paid 5.5 sen dividend per share on 5.7 earnings per share. Don't think their not growing in terms of net profit either, because they are, due to revenue increase and bigger profit margins. Their earnings does contract last year due to the global recession. However, even with the contraction, the company's earning in the past 7 years grow 14% compounded annually. Their eps growth in the last 7 years is less impressive, at 9.6% compounded annually. This is due to the issuance of bonus shares (1 free share for every 2 owned) upon their elevation to the main board.

Make sure there is margin of error in your buying price however because there's a potential that their net earnings might decrease. Two that i can think of right now is because of their pioneer status, they enjoyed a big tax break which would end this year (i think). The second is the rise of ringgit can have detrimental effect to net exporters such as them. However, they would not sink as low as to being unprofitable because they have high net profit margin (16.8%). 80% of their customers are repeat customers as well since rubber hose needs regular replacement.

This post has been edited by khizer982: Jul 10 2010, 06:30 PM

Sorry, I'm new at this so a few questions:

1. When a company declares for example: "dividend of 10 sen per share less income tax at 25%" means the net dividend to be received is 7.5 sen per share right?

2. What's the purpose of special dividend? I see some companies announce "first and final dividend" then also "special dividend". Why not lump both together? What is so special about "special dividend"?

1. Yes

2. "1st & final div" - self explainatory.
"Special div" - additional div other than the normal div. This happen (a) probably company has excess money or cash reserved wish to refund to shareholders (b) there are company loan money to give this so as to help parent co. like BJTOTO.

correct if i'm wrong, you don't get special divvy every year. it is not the typical divvy. .

Thanks for the explanation. Still lots to learn by going thru this thread.

The reason why company rate it as special div, is because normally ordinary div, final div, company want to commit to it as same as every year, aka generally a portion of the profit made of the year.
Special div - company doesn't commit nor promise to shareholders, generally the decision is made based on excess cash availability.

Having said that, there is no rule or whatever standard name coding about it, they can lum sum it together and called it final div as well. But normally company management want to make it clear to shareholders so generally, the above practice is adopted.

I suppose it's a good way to manage expectations as you pointed out.

BJTOTO this year only 29 cents total right?

What are your choice of dividend stocks for today?
I have some in mind, welcome comments and suggestions.
1. Panamy - 5-6%
2. Daibochi – 5-7%
3. Tomypak – 5-7%
4. TDM – 6-7%
5. Plus – 5-6%
6. pbbank – 5.1%
7. jcy – 6-9%

And from this thread, I also read cherroy taikor suggested BAT, PBB, Guiness, Panamy, Tanjong(no more! ), KLK, PPB few months ago.

NCB 7.5-8.0%
UAC 7%
PARAMON 6-7%
ZHULIAN 6.5%
WTHORSE 6.0-6.5%

Tomy is cheapest at the moment

Actually yield varies according to the price you paid for the share. While most people decide based on 1st year expected yields based on current share prices. Continuous dividends actually increases your yield year by year since you purchase price is reduced based on every dividend you received.

Ultimately, the investment pays for itself eventually just by holding on to it. And from then on, its basically free money every year. Though on average, most dividend paying companies are priced where it takes at least 10 years to recoup your capital if based on current prices. But price appreciation along the way affected by their growth will help reduce that time needed to recoup the cost of purchase.

At least that is how I see it. Anyone thinks the same?

I guess most of the case is like what you said, since big cap companies usually hires better management people, so they are more stable and consistent on profit. And also because of this, they grow less, which limit their share price growth. So the best is to have a combination of big cap(usually less risk) with small cap(usually more risk) of those having generous dividend policy. In fact, there are some small caps who grow more than 30% in share price with 6-7% dividend paid.

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Added on September 7, 2010, 4:13 pmCool. I'll look into these more.


This post has been edited by yok70: Sep 7 2010, 04:13 PM

Hingyap (7722) gives 10 cent dividend.

Current price is RM 1.48

Yield of 6.7%

How about CSC steel ? Dividend not too bad also.

52sen special dividend, am I reading this correctly?

Yup thats right. Today share price will jump.

already jump few days~

Dayum, already almost 30% gain, don't dare go in now

Digi pay so much div this year?

178sen + 35sen + 70sen + 120sen = 403sen = RM4.03

Almost 16.5% before tax