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As far as I know, there are no restrictions on how often a company can make use of a scrip dividend. A scrip dividend is like a mini “rights issue”. It bolsters the cash position of the company, eventually, over time, making it more valuable, as the net debt of the company is reduced.
Troajan
oops, i got confused. dismiss my figure. Still curious how did you get to yours
Troajan
It seems to me 20mil....How did you get 58mil?
58 mill,just there?
Generally you can always require if you so wish to have your divi as a scrip - of the SAME value as cash... In HMSO's the scrip alternative was largely very welcome by PIs - because it was MORE advantageous than cash... Is there a rule/legal restriction on how many times a company can make use of scrip of a different value than cash divi?... If there are none, and it is so advantageous for both company and investors, why the company is not doing it any more?...
There is a different between the profits from trading and the overall value of the company. As an REIT, Hammerson must pay out at least 90% of its trading profits. It has consistently done so, generally by way of the issue of a scrip dividend, by which shares equal to the value of the trading profit, about 2p per share, are distributed, rather than an actual cash dividend. Those shareholders wishing to have an income in cash can then simply sell their scrip dividend shares. So, in fact, with the current share price of 25p, a dividend of 2p represents a distributed profit of about 8% which is excellent, by comparison with other REITs, which generally, do not achieve a return (based on their share price) any higher than 6%.
Examining the financial facts has been a way more reliable path than just blindly accepting promises.
I don't think it's worth putting an effort into explaining someone's hopes or dreams.
So let's see the actual results (although some here are turning a blind eye on those).
Yuri,
'''....property market won't be in a very good shape in near term and consequently any disposal to maintain healthy liquidity - might be a very painful process.''''
In the RSN the CEO is strongly upbeat. How do you explain that?
Re:...so Hammerson will always pay a dividend as it is running quite profitably...
Not sure what imaginary alternative universe this came from but in here (the real world) net profits were consistently showing loss for 6 consecutive years. Matched with range of asset value write-offs - equity has drastically deteriorated from 6 Billions at the end of 2017.
It's not as disastrous as in office space segment (hugely leveraged lending and corps cancelling rental contracts because their workers say at home) but nonetheless property market won't be in a very good shape in near term and consequently any disposal to maintain healthy liquidity - might be a very painful process.
The low share price is a result of the company being seen as a risky investment, the risk being associated largely with its high level of indebtedness. This risk can be reduced, of course, if the company pays out its profits in the form of a scrip dividend.
All REITs must pay out all of their net profit so Hammerson will always pay a dividend as it is running quite profitably. It makes no difference at all whether the dividend is paid out in cash or by way of a scrip dividend, since the shareholder is able to sell the new scrip shares so as to have the dividend in cash, if he wishes. So, the form in which the dividend pays will have no affect on the share price at all. This is clear enough - in announcing that part of the profits will be paid out as a cash dividend, rather than as a scrip dividend, the share price has not altered at all, for the simple reason that the net position is exactly the same, in whatever form the dividend is paid. However, in the longer term, the company will become more attractive if the dividend is paid out in the form of a scrip dividend, since the indebtedness of the company will be reduced, making it a less risky investment.
For a long time now, the market has set the share price for Hammerson at one-half of its net asset value per share, so, with a NAV of 51p, the current share price of 25.5p seems in accordance with historic market sentiment. However, if the sale of the share in Bicester Village were to come off, then the share price would, of course, depart from this historic setting, since the company would then have a much lower indebtedness and most risk would disappear. There does not appear to be any news on this possible disposal, though.
This undervaluation is mostly due to how the dividend has been handled... About REITs, Investors can close an eye about growth but they are not going to blink about the dividend. Now we got a dividend at last, the sp should steadily increase. Plus the exciting prospect of additional good news should be coming -
Its still being priced like there was a pandemic on and malls were down to essential shops only.
Such a disconnect.
Interesting innovations at Brent Cross SC - Padel courts, Moorfields Eye Hospital consultants advising.
The CEO Rita-Rose Gagne has declared shopping trends are improving.
Indeed, it's been undervalued for a long while now, not helped by some of the boards decisions.
The news is very positive but very little uplift in SP..
Well, it might not have been explosive right now but the mid-term outlook looks quite good, which is what matters most (to me anyway).
Looks undervalued.
Get the value of the portfolio and subtract the debt and what is left is about x3 the present Market Cap
Imvho
A full year dividend of 1.5p per share represents a return of 6%, based on the current share price. That involves distributing only about two-thirds of the profits.
Going to be an interesting day tomorrow, hoping for some real positive news SP is way below where it should be
GLA
It's got so low it's turning into a buying opportunity
The SP drop was because HMSO said they were not going to do dividends. They did backtrack a little part way into the year, but only offered a tiny dividend which was nearly pointless.
This time last year these shares were worth 20% more than today at just over 30p,so even if they sell off some of their assets it won't make a great deal of difference to the share price.
It makes absolutely no difference to the shareholders whether the dividend is paid out in cash or by way of a scrip dividend. To comply with the rules relating to a REIT, the dividend does need to be paid out in one way or the other, but it makes absolutely no difference to the shareholders in what form they receive the dividend. Paying the dividend as a scrip dividend does enhance the cash position of the company, and is, in principle, more in the interests of the shareholders. So, let us hope for a prudent decision to pay out the dividend in the form of shares, rather than cash.
This sale is good news. The share price had, possibly, been marked up rather higher than this news really merited. It has settled back to a more realistic level now, at about 25.5p where it is likely to remain, with a little bit of a fluctuation when the figures which everyone expects are finally confirmed on Thursday. The sale of the interest in Bicester Village would be likely to lift the share price considerably, of course.