In the context of the gloomy stock market, many investors also have a significant source of income when many listed enterprises spend thousands of billions of dong to pay dividends - Photo: QUANG DINH
Talking to Tuoi Tre, a stock expert said that paying dividends regularly shows that the company is doing well, creating cash flow. Receiving cash instead of shares also creates a sense of security for investors, especially when the market is not performing well.
Businesses spend billions to pay dividends
Statistics of businesses that recently announced their dividend payment deadlines show that two companies plan to pay thousands of billions to shareholders.
In which, Saigon Beer - Alcohol - Beverage Corporation (Sabeco - SAB) will pay the first cash dividend of 2024 at a rate of 20%, meaning each share will receive 2,000 VND.
With nearly 1.3 billion shares in circulation, Sabeco needs to spend nearly VND2,600 billion to pay dividends. According to the resolution of the 2024 annual shareholders' meeting, Sabeco will pay a cash dividend at a rate of 35%. Thus, the company will have another dividend payment of thousands of billions next year.
With more than 1 billion shares in circulation and a 2023 dividend rate of 10%, Becamex IDC Investment and Industrial Development Corporation (BCM) also spent more than VND 1,035 billion to pay dividends to shareholders.
Similarly, in November 2024, Vietnam Oil and Gas Technical Services Corporation (PVS) also plans to spend VND 340 billion to pay 2023 dividends to shareholders at a rate of 7%.
But the highest cash dividend rate this time is Cao Bang Sugarcane Joint Stock Company with 30%/share.
That means each shareholder will receive 3,000 VND for each share owned. In addition, a series of other listed companies are also about to pay dividends such as TNG, HAN, DP1, HNF, HPT, TV3, HMS, PPC... with a rate of 3 - 30%.
Should you invest for dividends?
Speaking with Tuoi Tre, Mr. Tran Truong Manh Hieu - Head of Strategy Analysis at KIS Vietnam Securities - said that buying shares of companies that pay regular dividends is an investment strategy.
Accordingly, when investing in stocks that regularly pay cash dividends, investors will receive a regular stream of income in the form of dividends, in addition to the expectation of future price increases of that stock.
Businesses must do well and be confident that they can still generate cash flow in the future before choosing to pay dividends in cash.
According to this expert, there are some cases where after receiving dividends, businesses have a solid foundation and are doing well, and their stocks have an increase in price due to the positive impact of investor sentiment. However, there are also many cases where businesses pay dividends regularly but the market price is not as expected.
"Market prices are adjusted due to the company's valuation or partly due to high cash dividend payments, which also shows that the company no longer has the need to invest, expand projects or business areas, making it difficult for the stock to make waves," he emphasized.
Mr. Bui Van Huy – Director of DSC Securities Ho Chi Minh City Branch – also said that dividends are an investment method often chosen by investors with relatively low risk appetite. With this method, investors often aim for long-term investment, with a relatively sustainable rate of return.
“There are still many people who choose this form of investment instead of just waiting for waves or price fluctuations,” Mr. Huy commented, but also noted that not every time a business pays high dividends, they buy shares of that business.
“Investors need to pay attention to the sustainability and regularity of dividend payments. Dividend-earning investments are often aimed at businesses with good fundamentals, good liquidity, and easy to buy and sell. For these investors, they do not care much about market prices and are not too worried about “holding on to stocks” due to short-term trading,” said Mr. Huy.
Mr. Pham Binh Phuong - an expert at Mirae Asset Securities - said that investors who choose safety can be interested in businesses with production-oriented business activities or highly stable financial businesses such as the insurance industry.
“However, it should be noted that investing in stocks according to dividend or arbitrage strategies also requires a lot of knowledge, experience, information and time to be effective,” Mr. Phuong advised.
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