Tuesday, 06 August 2013 - 20:00
Charts
Dividends Dividends can be defined as the distribution of a portion of the earnings generated by a company. Private investors who need to receive a stream of income can invest in high dividend paying shares and investors looking for value biased shares will be on the lookout for companies with high dividend yields (dividend divided by price). For these, and other, reasons dividends are widely scrutinised by the public and both deserve further investigation.
Starting with the former; the widely used logic that higher dividend paying companies are the best choice when investing for income can, to a certain extent, be countered by the theory of dividend irrelevance. This theory states that if a dividend can be “home-made” (shares sold to create a dividend like cash stream) the presence of a dividend does not necessarily mean the investor is better off receiving a dividend.
Consider the example of Mr A, who needs an income of R 5 000 and can either hold 1 000 shares in Company X or Company Y. Both of the shares trade at R 50 and Company X declares a R 5 dividend, while Company Y doesn’t declare a dividend. When Company X goes ex-dividend (after the payment of the dividend) the value of the share should decrease by the amount of the dividend (R 5), as the cash is being paid to the investor from the company’s balance sheet.
If Mr A invests in Company X, his shares would now be worth R 45 000 and he would have received a R 5 000 dividend. If he invests in Company Y he can sell 100 shares and receive the cash flow of R 5 000. Because this transaction has no effect on the share price, his shareholding would be worth R 45 000 (900 shares @ R 50). The chart below reflects the position that Mr A would be in under both scenarios.
This is a simple illustration that Mr A should be in the same position if he receives a dividend or sells his shares (before the impact of any taxes). While the payment (or non payment) of dividends can be an important signal from management, a high dividend yield (or even the presence thereof) shouldn’t be the only determining factor when shares are bought.
Looking briefly at the latter use of dividends mentioned above, a high dividend yield is a sign that the company is generating good earnings (and importantly cash flow) relative to the current share price, which is a big positive. For value investors, the presence of a high dividend yield is often an important metric, as the investor gets rewarded with a good yield, rather than being solely reliant on selling the share at a higher price. Essentially there is a margin of safety. While a high historic yield is sought after – investors need to also ensure that the dividend is sustainable – i.e. that they will receive a similar (or better) dividend in the future.
At Seed we understand that a high dividend yield serves as a good indicator that the company deserves a closer look from a fundamental perspective. We therefore use dividend yield (both historic and forward) as a filter when looking at the investment universe. Those shares that offer investors a good yield are put on a short list, and can ultimately end up in our private client portfolios.
Kind regards,
Stefan Keeve
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 06 Aug 2013
Top News
South Africa's Treasury sold a total 2.35 billion rand of its 2031, 2037 and 2048 government bonds on Tuesday. Full story
Net interest income for the interim period ended 30 June 2013 increased by 6.9% to R10.3 billion (2012: R9.6 billion). Profit from operations rose by 8.4% to R5.5 billion (2012: R5 billion), while profit attributable to equity holders of the parent was higher at R3.9 billion (2012: R3.5 bill Full story |
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India said a group of
militants from Pakistan killed five of its soldiers in an ambush
along the disputed border in Kashmir on Tuesday, an accusation
that threatens to derail efforts to resume peace talks. Full storyFonterra, the world's
largest dairy exporter, came under fire from the New Zealand
government, farmers and financial regulators for its handling of
a food contamination scare that has triggered product recalls
and spooked parents from China to Saudi Arabia. Full story |
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Markets | European shares fell on Tuesday,
hit by declines in financial heavyweights HSBC and
Munich Re, and some traders predicted more weakness
as investors look. . . Full story | | U.S. stocks slid to session lows
on Tuesday following comments from Dennis Lockhart president of
the Atlanta Federal Reserve Bank, that the central. . . Full story | | Britain's blue-chip share index
fell in thin, volatile trade on Tuesday as a selloff in mining
stocks, led by Fresnillo, more than offset. . . Full story | | Wall Street sagged on Tuesday,
pulling back further from recent records as investors found few
reasons to buy, but the euro was supported. . . Full story |
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| U.S. stocks fell sharply on
Tuesday, with the Nasdaq briefly dipping more than 1 percent, as
investors booked profits from a rally that. . . Full story | | Gold extended losses to a
2-1/2-week low on Tuesday, as data showing economic growth on
both sides of the Atlantic dented the metal's. . . Full story | | U.S. stocks slipped at the open
on Tuesday, following the year's lowest-volume session, as
traders sought new catalysts to extend or sell the. . . Full story | | European shares nudged higher on
Tuesday as signs of a faster-than-expected recovery in the UK
and German economies helped the FTSE 100 and. . . Full story |
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SA Business | South Africa's rand was steady against the dollar on Tuesday, with market participants saying it could benefit from a successful government bond auction later in the session.. . . Full story | | South Africa's Merafe Resources reported a 30 percent decline in first-half earnings on Tuesday after the ferrochrome producer was hit by a write-down related to a potential asset sale.. . . Full story |
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| Nedbank on Tuesday became the latest South African lender to strike a note of caution about the worsening financial health of consumers in Africa's largest economy, after its debt costs jumped. . . Full story | | Nigeria is gradually opening
up to Islamic finance, a move that could bring non-interest
banking to over 80 million Muslims and develop one of Africa's
fastest-growing consumer and corporate banking sectors.. . . Full story | | South Africa's Nedbank Ltd said on Tuesday it had entered into an alliance with Bank of China to target trade and investment between Africa and the world's second-largest economy.. . . Full story |
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Company News | Shareholders were advised that Stefstocks' integrated annual report, incorporating the group audited financial statements for the year ended 28 February 2013 has been posted and emailed to shareholders today, 6 August 2013.
Notice of annual general meeting
Notice was given. . . Full story | | Nedbank Group Ltd. ("Nedbank "), the majority-owned South African banking subsidiary of Old Mutual, released its interim results for the six months ended 30 June 2013 today, 6 August 2013.
Highlights included:
*Headline earnings increased 13,3% to R3 914 million
*Diluted headline earnings per. . . Full story |
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Company Results | Revenue remained stable at R51.2 million (June 2012: R51.2 million). Results from operating activities decreased to R13.9 million (June 2012: R29.1. . . Full story | | Revenue increased to R1.5 billion (R1.2 billion). EBITDA declined to R210.2 million (R262.9 million). Net attributable profit slumped to R33.5 million. . . Full story | | Net interest income increased to R9.9 billion (R9.2 billion). Operating income rose to R14.1 billion (R13.2 billion). Profit attributable to ordinary. . . Full story | | Resilient has changed its year-end from 2013 onwards from December each year to June each year, therefore there are no comparatives.. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 41573.71 | -230.22 | -0.55% | JSE Top 40 | 17:00 | 37129.66 | -205.16 | -0.55% | JSE Gold | 17:00 | 1173.67 | -46.53 | -3.81% | JSE Financial | 17:00 | 30459.76 | -117.60 | -0.38% | JSE Industrial | 17:00 | 55014.54 | -29.82 | -0.05% | JSE Indust 25 | 17:00 | 48210.62 | 17.69 | 0.04% | JSE Resource | 17:00 | 46483.59 | -780.96 | -1.65% | DJ Futures | 20:00 | 15472.00 | -122.73 | -0.79% | DJ Ind | 20:00 | 15511.87 | -100.26 | -0.64% | SP 500 | 20:00 | 1696.90 | -10.24 | -0.60% | Nasdaq | 20:00 | 3664.50 | -28.45 | -0.77% | FTSE 100 | 17:35 | 6604.21 | -15.37 | -0.23% | DAX | 18:08 | 8299.73 | -98.65 | -1.17% | CAC40 | 18:08 | 4032.57 | -17.40 | -0.43% | Nikkei | 08:32 | 14401.06 | 143.02 | 1.00% | Shanghai | 09:28 | 2060.50 | 10.02 | 0.49% | Hang-Seng | 10:30 | 21923.70 | -298.31 | -1.34% | All Ords | 08:45 | 5088.00 | -5.80 | -0.11% | NZSE 50 | 07:50 | 4575.50 | -13.98 | -0.30% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1283.75 | -19.80 | -1.52% | Gold R | 20:00 | 12728.96 | -90.37 | -0.70% | Gold R/kg | 20:00 | 409236 | -3362 | -0.81% | Silver $ | 19:59 | 19.5620 | -.1200 | -0.61% | Platinum $ | 19:58 | 1426.00 | -23.00 | -1.59% | Palladium $ | 19:59 | 722.30 | -8.90 | -1.22% | R157 | 16:51 | 6.12 | .05 | 0.82% | R186 | 17:33 | 8.16 | .09 | 1.05% | R204 | 16:51 | 7.04 | .08 | 1.08% | R207 | 16:59 | 7.35 | .05 | 0.68% | Brent Crude | 20:00 | 107.93 | -1.02 | -0.94% | Rand / Dollar | 19:59 | 9.9197 | 0.0844 | 0.86% | Rand / Pound | 19:55 | 15.2156 | 0.1416 | 0.94% | Rand / Euro | 19:55 | 13.1990 | 0.1543 | 1.18% | Rand / NZD | 19:59 | 7.8485 | 0.1261 | 1.63% | Rand / AUD | 19:55 | 8.9230 | 0.1336 | 1.52% | Yen / Dollar | 19:59 | 97.6510 | -0.6110 | -0.62% | Euro / Dollar | 19:59 | 0.7513 | -0.0028 | -0.37% | Dollar / Euro | 19:59 | 1.3308 | 0.0048 | 0.36% | Pound / Dollar | 19:55 | 0.6503 | -0.0007 | -0.11% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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06/08/2013 | 124 | 205 | 81 | 410 | 213,692,368 | R11,374,743,122 | 118569 | 1136092 | 05/08/2013 | 191 | 181 | 71 | 443 | 204,197,712 | R12,199,635,076 | 146760 | 1103523 | 02/08/2013 | 192 | 146 | 71 | 409 | 179,029,636 | R13,555,566,077 | 154878 | 919617 | 01/08/2013 | 221 | 127 | 68 | 416 | 195,439,548 | R13,194,122,158 | 149340 | 378823 | 31/07/2013 | 209 | 131 | 81 | 421 | 198,404,937 | R13,629,317,823 | 153588 | 398350 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 37,129.66 | -205.16 | -0.55% | Industrial | 55,014.54 | -29.82 | -0.05% | Mid Cap | 55,179.12 | -366.79 | -0.66% | Small Cap | 45,798.41 | -18.08 | -0.04% | Resource 20 | 46,483.59 | -780.96 | -1.65% | Industrial 25 | 48,210.62 | 17.69 | 0.04% | Financial 15 | 11,425.41 | -71.25 | -0.62% | Financial & Ind. 30 | 50,950.75 | -28.66 | -0.06% | All Share | 41,573.71 | -230.22 | -0.55% | Oil & Gas | 35,302.18 | -135.46 | -0.38% | Mining | 27,870.20 | -551.51 | -1.94% | Gold Mining | 1,173.67 | -46.53 | -3.81% | Platinum Mining | 41.94 | -.73 | -1.71% | GENERAL MINING | 8,056.30 | -145.93 | -1.78% | Oil & Gas Producers | 18,981.33 | -72.83 | -0.38% | Basic Materials | 24,734.63 | -426.31 | -1.69% | Chemicals | 21,945.92 | -6.12 | -0.03% | Forestry & Paper | 24,343.26 | 113.07 | 0.47% | Industrial Metals | 23,523.49 | 37.69 | 0.16% | Industrials | 40,803.21 | -207.32 | -0.51% | General Industrials | 123.19 | -.33 | -0.27% | Consumer Goods | 52,283.55 | -55.08 | -0.11% | Automobiles & Parts | 8,484.93 | 174.37 | 2.10% | Household Goods | 177.13 | -3 | -1.66% | Health Care | 66,789.84 | -390.23 | -0.58% | Beverages | 166.08 | -2.02 | -1.20% |
| | Index Name | RP | Move | % Move | Food Producers | 71,433.28 | -1477.39 | -2.03% | Personal Goods | 1,000.16 | 21.37 | 2.18% | Consumer Services | 9,230.79 | 19.13 | 0.21% | General Retailers | 57,971.47 | -1253.63 | -2.12% | Travel & Leisure | 5,606.04 | -26.02 | -0.46% | Media | 182.54 | 4.10 | 2.30% | Support Services | 2,672.67 | 10.81 | 0.41% | Telecommunications | 9,088.34 | 15.01 | 0.17% | Financials | 30,459.76 | -117.60 | -0.38% | Banks | 50,364.58 | -147.21 | -0.29% | Non-life Insurance | 48,351.82 | 370.07 | 0.77% | Life Insurance | 29,173.35 | -209.25 | -0.71% | General Financial | 2,825.91 | -11.22 | -0.40% | Technology | 41,978.63 | 85.23 | 0.20% | SHARIAH TOP40 | 3,453.64 | -40 | -1.14% | FTSE/JSE SHARIAH ALL | 3,579.54 | -39 | -1.09% | COAL MINING | 19,365.79 | -75 | -0.38% | FTSE JSE Fledgling | 5,558.78 | -2 | -0.03% | FTSE/JSE Alt X | 987.58 | -8 | -0.81% | SA LISTED PROPERTY | 502.47 | | 0.15% | CAPPED PROPERTY | 420.14 | | 0.02% | RESOURCE | 25,366.93 | -429 | -1.66% | DIVIDEND PLUS | 202.74 | -2 | -1.04% | FTSE/JSE RAFI 40 | 8,147.53 | -73 | -0.89% | Capped Top 40 | 19,634.03 | -100 | -0.51% | Capped All Share | 21,053.02 | -114 | -0.54% | JSE TABACO | 6,806.84 | -38 | -0.55% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | REM | REMGRO LIMITED | HOLD | 04/08/2013 | VOD | VODACOM GROUP LIMITED | HOLD | 02/08/2013 | PIK | PICK N PAY STORES LIMITED | SELL | 02/08/2013 | SGL | SIBANYE GOLD LIMITED | BUY | 02/08/2013 | TKG | TELKOM SA LIMITED | SELL | 02/08/2013 |
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Results Expected** Expected | Company Name | Fin. Date | 08/08/2013 | AQUARIUS | June 2013 (Final) | 08/08/2013 | AQUARIUSCVT | June 2013 (Final) | 08/08/2013 | EXXARO | June 2013 (Interim) | 08/08/2013 | MONDILTD | June 2013 (Interim) | 08/08/2013 | MONDILTDP | June 2013 (Interim) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | SBR003 | 05/08/2013 | 25/10/2013 | 05/11/2013 | R 1.3700 | LIB-HOLD | 01/08/2013 | 23/08/2013 | 02/09/2013 | R 2.1200 | INTUPROP | 01/08/2013 | 11/10/2013 | 19/11/2013 | R 0.0500 | ZURICH SA | 01/08/2013 | 23/08/2013 | 02/09/2013 | R 1.0000 | FIRSTRANDB-P | 01/08/2013 | 16/08/2013 | 26/08/2013 | R 3.2025 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | OANDO | 29/07/2013 | 01/08/2013 | 30/08/2013 | R 0.7500 | NIVEUS | 25/06/2013 | 01/08/2013 | 12/08/2013 | R 0.1800 |
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Upcoming AGMs** Code | Company Name | Date | Status | SOV | Sovereign Food Investments Ltd. | 07/08/2013 | Confirmed | AND | Andulela Investment Holdings Ltd. | 07/08/2013 | Confirmed | ANDP | Andulela Investment Holdings Ltd. | 07/08/2013 | Confirmed | MML | Metmar Ltd. | 07/08/2013 | Confirmed | MMLP | Metmar Ltd. | 07/08/2013 | Confirmed |
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