Real sector dividend fails to attract investors

Few companies’ handsome dividend declaration have also failed much needed cheer in stock market.
Two of the highest dividend paying companies listed in Nepal Stock Exchange (Nepse)— Unilever Nepal and Chilime Hydropower — has both declared the dividend from last fiscal year’s earning.
The dividend this year is higher than that of last years as Chilime will be distributing 30 per cent can dividend and 40 per cent stock dividend and Unilever will be giving Rs 590 per share. Last year these companies had given 60 per cent and Rs 560 cash dividend per unit share, respectively.
Another hydropower company — Arun Valley Hydropower — has also declared 15 per cash dividend for the shareholders. Nepal Telecom, Butwal Power Company and other such companies are yet to announce their dividends from last fiscal year’s profit. Despite the dividend announcements, share market benchmark index -Nepse index is hovering over 330 points since last two months without any shard of reaction against dividend announcements.
“The real sector companies are the highest dividend paying companies but their attractive dividends are not able to bring in more investors in the market,” said share analyst and managing director of Securities Research Center and Services Rabindra Bhattarai.
“These companies’ share in total market capitalisation of Nepse is small that is the reason why their good performance is limited only in maintaining their prices,” he added. Among twenty eight companies listed under manufacturing, trading, hydropower and others, only nine companies’ stocks are actively traded in the market. All of these companies offer good amounts of cash and stock dividends and are doing quite well in the market as well. But in the market with overwhelming presence of financial intermediaries, the good performance of the scanty number of shares goes unnoticed.
Though the major commercial banks have announced attractive dividends, development banks and finance companies’ dividend declaration is not much cheering for investors. However, investors in commercial bank stock were also not happy about less stock dividend distribution.
The dividends are one of the important features that a non-speculative investor regards before purchasing the stock. Moreover, empirical studies also show that companies that pay dividends are usually historically stable. Dividends also help lessen the potential fall of a company’s stock price. Dividends that many companies pay out regularly to shareholders from its earnings send a message about future prospects and performance.
Source: THT


One Response

  1. The stock market has fallen due to lots of shares flooded in the market. As per economics theory.. where there is scarcity of demand usually the pricing is extremely low for that commodity even thou its actual price should be much higher. Supply is extremely high than needed.
    Therefore there are lots of stocks right now which are at the best market price.

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