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A well-structured dividend policy plays a crucial role in a company's capital allocation strategy. However, it's essential to strike a balance by ensuring adequate investment in the company's operations to prevent operational deterioration. The key lies in aligning your dividend policy with the needs of both shareholders and the business operations. #DividendPolicy #CapitalAllocation #FinancialPerformance

“Evolve Capital Advisory pegs the estimated value of each Best World share at between S$1.36 and S$2.69” The range is so wide it’s pointless. The trick is to not pay dividends and pay outrageous remuneration to management. This will depress the share price and the excessive remuneration will also reduce the NAV - making the offer appear fair. It would also be ‘reasonable’ as minority shareholders would not really want to stay vested in the company with little liquidity and get more of the same treatment.

In mutual funds how it's divided are treated?? In mutual funds, dividends are treated differently depending on whether you choose a dividend reinvestment plan or a dividend payout option. Here's a breakdown of both scenarios: Dividend Reinvestment Plan (DRIP): * Dividends are automatically reinvested into additional shares of the same mutual fund. * No cash is received by the investor. * This strategy can help you accumulate more shares over time and benefit from potential long-term growth. * Reinvested dividends are generally subject to capital gains tax when you sell the shares. Dividend Payout Option: * Dividends are paid out to investors in cash. * Investors can choose to receive the dividends directly into their bank account or reinvest them manually. * Dividends received are typically taxed as ordinary income in the year they are received. Important Points: * The frequency of dividend payments varies depending on the mutual fund. Some funds pay dividends monthly, quarterly, or annually. * Dividend payments are not guaranteed and can fluctuate based on the fund's performance. * Dividend reinvestment plans can be a convenient way to grow your investment without having to actively manage your funds. * It's important to consider your tax implications and investment goals when deciding whether to opt for dividend reinvestment or dividend payouts. Additionally:- SEBI has mandated a change in the name of dividend plans from "Dividend Plans" to "Income Distribution cum Capital Withdrawal (IDCW) Plans" to better reflect the nature of these plans. IDCW plans distribute a portion of the fund's income, which may include both dividends paid by stocks and capital gains made by selling underlying stocks from the scheme portfolio.

MainFT is reporting that private equity firms want to loosen the conditions of their loan documentation to allow them to make even larger so-called "dividend recapitalisations" – getting a company they own to borrow money to pay the PE owner a special dividend. But what is the real impact of dividend recaps on the private equity fund, investors, creditors, the company itself and the people who work there? An interesting new paper set out to find out.

“Each of the month’s large gain positions became opportunities due to multi-year bouts of unpopularity and, eventually, indiscriminate selling by other investors.” In the latest Pender Corporate Bond Fund commentary, Lead Portfolio Manager of Fixed Income, Geoff Castle reflects on the importance of understanding the capital structures of out-of-favour companies. Read the full commentary here: https://bit.ly/3YDGT3M You can learn more about Pender's approach to #FixedIncome investing, including the Fund's recent award win, here: https://bit.ly/3LYy2lC If you liked this post, please #subscribe for all our content updates: https://bit.ly/3WF4nCR

A well-structured dividend policy is one part of a company’s overall capital allocation strategy. Ultimately, your dividend policy should weigh the considerations of both your shareholders and the business’ operations. Learn more about the four main dividend policies to consider if you elect to distribute cash to shareholders: http://spr.ly/6040wkycC

Having a well thought out dividend policy is an important factor to set your company up for success and to maximize shareholder value.

In the PE world, many managers try to use a clever trick to make returns look higher than the true value to the investor. They use subscription lines to buy companies and then delay when they call capital from investors. This shortens the hold period of an investment, and since time is one of the core drivers of IRR, it makes it look like investor returns are higher. But investors have to keep cash liquid for capital calls, and during the time the manager is using their subscription line to fund transactions, investors are not earning a material return on their cash, so their overall return is not really higher. Most allocators are on to this trick, so IRR is no longer the holy grail returns metric. Many PE managers are also still reporting over-inflated NAVs, so they can show high unrealized returns. But if the valuations are still high, wouldn’t it be easier to sell companies and create the desired liquidity for investors? After all, the most accurate valuation methodology is what the market is willing to pay at any given time. With that, unrealized MOIC based on NAV valuations is also not the best return metric. Right now, we're seeing more investors focusing on DPI (Distributed to paid-in capital). DPI is essentially a multiple of REALIZED returned capital. This is a tough metric for private equity because actual cash returns are way lower than desired. This article from Bloomberg reports payouts are down by 49% in major firms and investors are saying that “DPI is the new IRR”. DPI investors love Tide Rock’s unique model. We are committed to delivering consistent quarterly distributions to investors, so our realized returns have been great. We just recently reported our annual results. Our distributions grew significantly from 2022 to 2023 and our returns were produced without using any long-term bank debt. Delivering tangible returns has always been important to us, and investors are valuing it even more as other models struggle with liquidity challenges.  #unleveredbuyout

Our semi-annual letter for investors is out. Click on the link below to read about the performance of the Fundsmith Equity Fund during the first half of 2024. Capital at risk. https://bit.ly/3LUsTec #investmentmanagement #investment #equityfund #fundsmith #finance

💹𝗘𝘅𝗽𝗹𝗼𝗿𝗶𝗻𝗴 𝘁𝗵𝗲 𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗳 𝗗𝗶𝘃𝗶𝗱𝗲𝗻𝗱 𝗥𝗲𝗰𝗮𝗽𝘀 𝗶𝗻 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗘𝗾𝘂𝗶𝘁𝘆 💹 #StructuredFinanceCorner by Luis Miguel Zuluaga Dividend recaps have long been a strategy for PE firms to "create" value for their investors. In essence, this technique involves leveraging either the portfolio company or the fund itself (through NAV financing) to pay an extraordinary dividend to their investors (LPs). Recently, the Financial Times shared some insightful findings on this practice, now mainstream in the structured finance arena. 💡 Key takeaways 🔷 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲𝗱 𝗕𝗮𝗻𝗸𝗿𝘂𝗽𝘁𝗰𝘆 𝗥𝗶𝘀𝗸: With leverage levels exceeding 5.0x Debt/EBITDA, dividend recaps significantly raise bankruptcy risk over the next six years (31% vs. 1.3%) 🔷 𝗛𝗶𝗴𝗵𝗲𝗿 𝗥𝗶𝘀𝗸 𝗔𝗽𝗽𝗲𝘁𝗶𝘁𝗲: After achieving favorable returns, GPs may push for riskier strategies, as the investment’s payoff now resembles a call option (all or nothing) 🔷 𝗠𝗶𝘅𝗲𝗱 𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝗥𝗲𝘁𝘂𝗿𝗻𝘀: While dividend recaps can boost individual deal returns, they may negatively impact overall fund performance. Increased short-term distributions encourage GPs to raise new funds based on interim results, leading to: ▪️Increased focus on new fundraising driven by strong metrics of legacy funds (DPI: Distributions to paid-in) ▪️A decline in the quality of subsequent LBOs due to less scrutiny and a binary risk approach ✅ Despite the potential risks and misalignments that div-recaps may arise between GPs and LPs, this technique remains an attractive option for providing liquidity/enhancing returns to LPs, especially in times of low interest rate environments or sluggish M&A markets Full article: https://lnkd.in/e8zMF_8e