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"what happens to the now unpaid dividends" ... good question, once the share is bought back and transferred to the treasury stock then it loses its eligibility for the dividend. So basically the company saves the 85p per share that it buys back between now and the exDiv date. Effectively its buying back shares at the market price less 85p. Hence as you say the 85p should be added back either this time around or in September. Two things about the dividend announcement ... first I was very pleased to see that they had done the maths in an appropriate way to reallocate the same funds over the reduced number of shares -- it's important that they don't take a windfall gain out of those numbes. Second ... I was going to be pleased that the buy back seemed to be triggered by the low 2800's sort of range. That seemed controlled and sensible ... I would have preferred to top-up myself at those levels rather than have the company do it compulsorily for me ... but it wasn't too bad a level. Now they are buying up at the 2880-90 level and it doesn't look such a good thing anymore. I get the impression that the board think anything less than about £29-30 is cheap and will warrant a slow but continuous buy back. I don't share that conviction and would want more individual flexibility rather than the corporate straight jacket of the buy back. Finally (and possibly third) ... we've lost 15% of our dividend and it's not clear to me that we've got a 15% gain in either equity or income flow. For me, as an income investor, this share has gone from being a very attractive investment to, at best, one with an unpredictable and inconsistent income flow -- and potentially very mediocre. Mike
Ha and in comes an RNS to contradict my 'trigger' price straight away. Have to say that it does seem a very scatter gun approach for this buy back, and seeing as they have bought back before these shares go ex-div, what happens to the now unpaid dividends? Does that get added to the September pot? I'll keep watching/ holding for the moment, but I'm not sure I'd have bought in today with this strategy.
This was known already though. If it helps, the reduced share count means that the September payment starts at £1.005 (roughly) rather than £1.00. It seems that the 'trigger' for the buy backs is a price under £28.50 - when it's been above that there's been no buying (apart from the very first buy backs in January). I'm not personally a huge fan of the buy back here and hope that that SP stays high enough not to be used again, but I think the impact has been fairly low level, and if you held until the end of the current shareholder payment plan period you'd see about 1/3 of the spend come back in improved dividends at this point - whether the SP would increase by enough to compensate you for the 2/3 spent is the point for discussion I guess.
of the dividend money buying back shares ?..... and that's from this dividend alone, wonder what damage will be done to the next one. throws some negativity into holding in the long term
ignore me, i got my dates mixed up, sorry, egm's 23rd not today, doh!
anyone here anything from the EGM today ?
Chris, well spotted that the repurchased shares are being held in treasury and have not so far been 'retired' or cancelled. But, being in treasury does mean that they are not entitled to the dividend and neither do they participate in the EPS calculations etc. So all the various calculations that have been discussed still hold I'm afraid. The only real difference between being in treasury and being cancelled is that they could be issued again without having to be created anew ... and that does bring into question why a board might wish to keep them hanging around. If I were overly cynical or Machiavellian I might think that they might be going to play a part in the soon to be revised incentive plan that is up for the EGM on the 23rd -- which reminds me that I had better read the details of that ... Mike
Sadly more assumptions ... leaving aside the personal ones again ... you assume an efficent market place and sadly that's not what we have. Who says that the shares will be worth the 33.33% more than they were before the 25% were bought and cancelled? you? the market? some broker? ... they could be worth almost anything, less, more, the same. The dividend is set and fixed (leaving aside currency issues perhaps) and paid. That is my point ... I don't have to trust Mr Market to maybe make up the shortfall that I need. Further I may choose to reinvest the dividend in this company, I may hold and reinvest later at a different price, I may choose to invest in another company altogether, I can spend it. The point is I have a choice ... with buy-back I have none. As for the mathematics, there is actually a very small advantage to the buy back if we assume a perfect market and no dealing costs. But it is very small, and sadly selling small numbers of shares is not efficent either in terms of dealing costs or time. Mathematically it may look the same ... in practice it's rather different. As I keep saying, for me as in income investor buy backs are not good news ... there's some hope for this particular buy back scheme as I've mentioned before, but I'm waiting to see how they actually do the numbers come the next set of results before buying or selling further. Mike
Leaving aside the personal taunts ... at best a buy back replaces the certainty of a guaranteed, assured monetary transfer of a dividend with the vagaries of the markets valuation of the share itself. And I reiterate, that for myself, as a long-term income based investor, the replacement of income stream with hoped for (but not guaranteed) capital gain is not a good deal. For you it may be different, but for me it's not. Mike
Sorry RichRed ... got the wrong end of the 80/20 split there. I concur, the figures to date suggest 15p reduction in the upcoming dividend. However, I don't concur about it being just another form of Dividend Reinvestment Plan (DRIP). We're not being given extra shares in lieu of the dividend we would have received, rather there is a hope (not a guarantee) that the market will reward us with an increased share price ... and it's compulsory with no mechanism for getting the equivalent money back out. As I've said before there are a couple of pluses as regards this specific buy back. The first is that the board has undertaken to return the same level of money overall (most sneakily use the lower number of shares to retain the difference) and the second is that they have indicated that the appropriate dividend amount will be split over the reduced number of shares. Richred's figures suggest that the reduction in share numbers will increase the dividend by approximately 1p ... but for that we are losing 15p of actual dividend. And for us long-term income based investors there's no mechanism to get that 14p back without selling and reducing our income stream even further in future years. From my own perspective its not a good deal. Mike
Just a clarification - my maths make it that currently the £1/ share that was expected in March will be reduced *to* £0.85 rather than reduced *by* £0.85 (assuming that no more buy backs happen). On the plus side, thanks to the power of rounding, my spreadsheet now shows that future dividends (Sept 17 on) will be £1.01 rather than £1.00 :) - it may not happen though as it really shows £1.00542/ share.
Shrinking dividends ... As board of directors has indicated, and others on this board have posted, the dividend is not stonking, it's shrinking. Richred_uk estimated a short while ago that the buy back has already taken the equivalent of 85p out of the upcoming 100p dividend. Unless the board balances the buy back over the whole year we may be looking at a 15p not a 100p dividend this time around. Mike
Generally Boards that do buy backs can't resist returning to the trough again and again ... it's just too easy for them to artificially boost EPS, and ironically maintain dividends. So I'd normally say that anything would be on the cards in the future. But ... I have to say, this board has made a couple of encouraging statements that suggest that they intend to play the game fairly and a) ensure that the total amount used/returned agrees with what they said in previous years and b) the dividend per share will be increased to allow for the reduced number of shares in issue and c) the bonus scheme will be adjusted to allow for the artificial growth in the EPS etc. If they do that then that goes some way to at least levelling the playing field. But we need to see how it actually operates in practice. Compared to cash/divi in the bank account, for me personally, any buy back is probably a disadvantage. I await the results ... until then I'm holding fire. Mike
as it stands they are pushing twice yearly dividends, can anyone see them scrapping that in favour of a once a year plan, to free up more cash for them to buy back a lot more shares, and do a single dividend over a pound ?
This is testing its recent resistance of 2951p and is the third test since 7th December. It's broken beyond it's upper trend channel and that makes me feel the next leg is up. It's also got a way to go to close the Brexit gap which was about £32, and that should be filled before a pullback. #bullish and a buy in my opinion.
By my reckoning, currently £0.85/ share if they didn't buy again. Every £1.3M spent takes about another penny of the next dividend (roughly).
at the rate they're buying back shares, will there be anything left for a dividend ?? !
Cheers
If you go to the RNS section, read the half year report on 2nd December, it's all in there. Brief version is it will be declared in Feb 17, paid March 17, £1 per share less the impact of the buybacks. My maths currently has it at about £0.87 per share, dropping with each buyback.
Does anyone know when the next dividend payment amount will be announced and when it will be paid? I can't find any dates anywhere.
Berkely has been ranging since Dec 6th. However, now the 50 day EMA has crossed the 200 EMA to the upside. That's a Golden Cross, and buying signal for some. In the next few days we might see the next leg up in the price. PS: If you're not a technical trader and intend to reply with abuse or intolerance, please save your typing for another topic.
But the buy back hasn't finished yet ... its barely started -- unless there's been some kind of news/RNS that I haven't seen. So far we've only had 8 trading days worth -- most buy backs seem to go on for 3-4 months. If that's the case here, then over 100 trading days we would be looking at £150m+ and that's a lot more than the trival 9p per share that the present numbers already give. (More like half the annual dividend in fact) And the major point is ... compared to the certainty of a share dividend, what does the buy back give us/me? For a long term holder any share price increase is one off at best, gained only when the holding is sold ... and any increased earnings per share is vulnerable to being used to buy more shares back rather than being paid out as dividends. From a long-term, income driven holder's perspective what's going on doesn't look good news. I'll stay in until the next set of results are posted, review what happens to the dividend then and make a decision accordingly. Mike
Including today's RNS, they've spent pennies under £13M to remove 457k shares. Based on 138.8M shares which is what the dividend pool of £277.7 M per year is supposed to be based on (IIRC - please correct me if not), the buy back means that the March dividend of £1/ share will be reduced by about £0.09. Subsequent dividends from Sept onwards (if the whole thing froze right now) would be higher by about £0.003. By my table, based on the pay out plan to Sept 2021, the scheme has a net cost of about £0.06/ share so far. Whether you think that the SP has been supported by more or less than £0.06 I guess is the crux of whether this has been a sensible use of shareholder funds. Personally I am leaning towards thinking no and I'd rather the SP was allowed to find it's own level and if I thought it was undervalued I'd buy more. That said, if the SP suddenly jumps up into the 30's then I might see the buy back as having been genius :)
Why? ... because the company is spending £2-3 million of the dividend fund every day on buying back its own shares. (est 20-30 million so far) ... and that's money that's not going to be paid out as a dividend. So, if you're investing for the dividend income the future is uncertain now. So far I estimate they've spent 10% of the annual dividend on the buy back scheme, and that means the dividend could well go down by that amount -- and if they continue this buy back it will only get worse. Mike
Why?