Despite its small presence, real sector companies have rewarded investors more handsomely than financial institutions (FIs) listed at the stock exchange.Dividend distribution by real sector companies — manufacturing firms, hotels, hydropower companies and trading firms — are higher than that announced by FIs — commercial banks, development banks, finance companies and insurance firms. Including both stock and cash dividend, on an average, real sector has provided shareholders dividends worth 126 per cent of the paid-up capital against an average 22 per cent dividend payout by financial sector companies.
Among the 238 Nepse-listed companies, only 139 companies have distributed part of their earnings to shareholders from the profits earned in fiscal year 2012-13 so far — April 10.
“For an investor, dividend yield is an attractive factor, especially for the non-speculative investor,” said Raj Kumar Timilsina, acting president of Nepal Investors’ Forum.
“And this year, bullish stock prices along with good dividends have rewarded investors handsomely,” he added.
This year too, Unilever Nepal distributed the highest amount — Rs 760 per unit share. The producer of consumer goods such as Sunsilk and Clinic Plus shampoo made its shareholders happiest among all listed companies. A unit of share of the Nepali arm of multinational Unilever is being traded at more than Rs 11,000 in the market at present — making its stock the most expensive.
In addition, companies such as producer of Coca-Cola — Bottlers Nepal (Balaju), and Nepal Lube Oil have offered more than 40 per cent as dividend. Hydropower companies such as Chilime Hydropower and Butwal Power Company have offered 40 and 18 per cent dividends, respectively. Likewise, Soaltee Hotel also handed out 52 per cent of its face value — Rs 10 per unit — as dividend.
Among financial sector companies, NIDC Development Bank has offered 133 per cent stock dividend as it has to fulfil regulatory capital requirement by end of current fiscal year. Insurance companies are among the top givers as Nepal Life Insurance Company announced dividend of 98 per cent, including 70 per cent in bonus shares and the rest in cash. Likewise, National Life Insurance also announced its dividend of 55 per cent bonus shares and 17.5 per cent cash amounting to 72.5 per cent in total.
Among banks, Nabil Bank and Everest Bank are among the top dividend givers, offering 65 per cent and 60.53 per cent of their paid-up value.
Although real sector companies have provided higher dividends in terms of amount, only eight companies have announced dividends among the 33 listed at the stock exchange. On the other hand, among the 205 listed FIs, 131 have given dividends from last fiscal year’s earning. Moreover, except for hydro companies and hotels, shares of rest of the real sector companies rarely get traded.
Higher dividend also helps lessen the potential fall of a company’s stock price, thereby reducing volatility.
“Investors would prefer good companies like commercial banks to give away more stock dividends in the form of bonus shares than cash, as the value of a good stock is far higher than cash,” said Timilsina.
source: the himalayan times,11 april 2014
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