金融学基础语银行实务.ppt

,WhereareWe?,Chapter49,WhereareWe?,Chapter49,Chapter7DividendandDividendPolicies,Outline,Dividends,Adividendisthecash,stock,oranytypeofpropertyacorporationdistributestoitsshareholders.dividendsarenotalegalobligationofthecorporationitistheboardschoice.Whentheboardofdirectorsdeclaresadividenddistribution,itspeciestheamountofthedistribution,thedateonwhichthedistributionispaid:,Dividends,Therearefourkeydatesinadistributionadividenddistribution1.Thedeclarationdate,whichisthedatetheboarddeclaresthedistribution.2.Theex-dividenddate,alsocalledex-date,istwodayspriortothedateofrecord.Anyinvestorwhoownsthestockthedaybeforetheex-datereceivestheforthcomingdividend.Anyinvestorwhobuysthestockontheex-datedoesnotreceivethedividend.3.Thedateofrecord,whichisthedatethatdetermineswhoreceivesthedividend.Aninvestormustbelistedinthecompanysrecordbookonthedateofrecordtoensuretherightofadividendpayout.4.Thepaymentdate,whichisthedaythedistributionismade.Thisdateisgenerallyaweekormoreafterthedateofrecordsothatthecompanyhassufficienttimetoensurethatitaccuratelypaysallthosewhoareentitled.,Dividends,TherearefourkeydatesinadistributionadividenddistributionWhyAllTheseDates?Ex-dividenddatesareusedtomakesuredividendchecksgototherightpeople.Intodaysmarket,settlementofstocksisaT+3process,whichmeansthatwhenyoubuyastock,ittakesthreedaysfromthetransactiondate(T)forthechangetobeenteredintothecompanysrecordbooks.ifyouarenotinthecompanysrecordbooksonthedateofrecord,youwontreceivethedividendpayment.,Dividends,TherearefourkeydatesinadistributionadividenddistributionQuestion1:whendoyouthinkisthelatestdateaninvestorneedstobuyacompanysstockifhewantshispurchasetobeshowninthecompanysbook?Question2:Whenistheearliestdateaninvestneedstoholdacompanysstockbeforehesells,inordertostillreceivethecompanysdividend?,Lastdaytobuy,Earliestdaytosell,Dividends,Cashdividends:Mostdividendsareintheformofcash.Cashdividendsarepaymentsmadedirectlytoshareholdersinproportiontothesharestheyown.,Dividends,Cashdividends:Weusuallydescribethecashdividendsthatacompanypaysintermsofdividendpershare,whichwecalculateas:Anotherwayofdescribingcashdividendsisintermsofthepercentageofearningspaidoutindividends,whichwerefertoasthedividendpayoutratio.Ifwetakethislastequationanddivideboththenumeratorandthedenominatorbythenumberofcommonsharesoutstanding,wecanrewritethedividendpayoutratioas:Thedividendpayoutratioisthecomplementoftheretentionratio,alsoreferredtoastheplowbackratio.Theretentiontheproportionofearningsretainedandreinvestedbackintothecompany.,Dividends,Cashdividends:Exercise:Forscalyear2008,Wal-MartStoresreportedthefollowingnancialresults:Earningsavailabletocommonshares$13.400billionDividendspaid$3.746billionNumberofcommonsharesoutstanding3.81billionQuestion：WhatareWal-MartStoresearningspershare,dividendpershare,dividendpayoutratioandretentionratio?,Answer:Dividendpershare=$3.746billion/3.81billion=$0.9832pershareDividendpayoutratio=$3.746billion/$13.400billion=27.955%Earningspershare=$13.4billion/3.81billion=$3.517pershareRetentionratio=1-27.995%=72%,Outline,Dividends,Stockdistribution:Whendividendsarenotincash,theyareusuallyadditionalsharesofstock.Additionalsharesofstockcanbedistributedtoshareholdersintwoways:payingastockdividendandsplittingthestock.,Dividends,Stockdividend:Astockdividendisthedistributionofadditionalsharesofstocktoshareholders.Stockdividendsaregenerallystatedasapercentageofexistingshareholdings.Ifacorporationpaysastockdividend,itisnottransferringanythingofvaluetotheshareholders.Theassetsofthecorporationremainthesameandeachshareholdersproportionateshareofownershipremainsthesame.Allthecorporationisdoingiscuttingitsequity“pie”intomoreslicesandatthesametimecuttingeachshareholdersportionofthatequityintomoreslices.,Dividends,Stocksplit:issomethinglikeastockdividend.Astocksplitsplitsthenumberofexistingsharesintomoreshares.Forexample,ina2:1splitreferredtoas“twoforone”eachshareholdergetstwosharesforeveryoneowned.Ifaninvestorowns1,000sharesandthestockissplit2:1,theinvestorthenowns2,000sharesafterthesplit.Question:Hastheportionoftheinvestorsownershipinthecompanychanged?,No,theinvestornowsimplyownstwiceasmanysharesandsodoeseveryothershareholder.Iftheinvestorowned1%ofthecorporationsstockbeforethesplit,theinvestorstillowns1%afterthesplit.,Dividends,Reversestocksplit:issimilartoastocksplit,butbackwardsExample:a1:2reversestocksplitreducesthenumberofsharesofstocksuchthatashareholderreceiveshalfthenumberofsharesheldbeforethereversestocksplit.Astocksplitinwhichmoresharesaredistributedtoshareholdersissometimesreferredtoasaforwardstocksplit.thereisnoactualdistributionmade,butsimplyadivisionoftheequitypieinthiscase,intofewerpieces.,Dividends,Differencebetweenastockdividendandastocksplit.stocksplitsandstockdividendsareessentiallythesame.thereisonlyaminordifferenceinaccounting:Astockdividendrequiresashiftwithinthestockholdersequityaccounts,fromretainedearningstopaid-incapitalfortheamountofthedistributionAstocksplitrequiresonlyamemorandumentry.,Dividends,Reasonsforstockdividends:1.toprovideinformationtothemarket:Acompanymaywanttocommunicategoodnewstotheshareholderswithoutpayingcash.Forexample,ifthecorporationhasanattractiveinvestmentopportunityandneedsfundsforit,payingacashdividenddoesntmakeanysensesothecorporationpaysastockdividendinstead.Butisthisaneffectivewayofcommunicatinggoodnewstotheshareholders?Itcostsverylittletopayastockdividendjustminorexpensesforrecordkeeping,printing,anddistribution.Butifitcostsverylittle,doinvestorsreallytrustitasasignal?,Dividends,Reasonsforstockdividends:2.toreducethepriceofthestock:Ifthepriceofastockishighrelativetomostotherstocks,theremaybehighercostsrelatedtoinvestorstransactionsofthestock,asinahigherbrokerscommission.Bypayingastockdividendwhichslicestheequitypieintomorepiecesthepriceofthestockshoulddecline.Thereisnochangeinvalueoftheportionoftheequityanyinvestorowns.Nothingeconomichasgoneonherethecompanyhasthesameassets,thesameliabilities,andthesameequity.Example:Supposeaninvestorowns1,000shares,eachworth$50pershare.Ifthecorporationpaystheinvestora5%stockdividend.Howmanysharesdoestheinvestorownafterthedividend?Whatdoyouthinkthepricepershareshouldbenow?,Sharesownedafterdividend=1050Pricepershareafterdividend=(1000*$50)/1050=$47.6,Dividends,Reasonsforstocksplit:Likeastockdividend,thesplitreducesthetradingpriceofshares.Example:Ifaninvestorowns1,000sharesofthestocktradingfor$50persharepriortoa2:1split,thesharesshouldtradefor$25pershareafterthesplit.,Dividends,Reasonsforreversestocksplit:Companiestendtoreversestocksplitwhenthestockspriceisextremelylow,solowthattheyareatriskofbeingdelistedfromanexchange.Alowstockpriceisafunctionofhowmanysharesareoutstanding,butmostlyafunctionofpoorperformancewhichhasledtoalowshareprice.,Dividends,EffectofstockdividendsandstocksplitsThesharepriceofcompaniesannouncingstockdistributionsandforwardstocksplitsgenerallyincreaseby1%to2%atthetimeoftheannouncement.Whenthestockdividendisdistributedorthesplitiseffected(ontheex-date),thesharespricetypicallydeclinesaccordingtotheamountofthedistribution.Example1:Supposeacompanyannouncesa2:1split.Itssharepricemayincreaseby1%to2%whenthisisannounced,butwhenthesharesaresplit,thesharepricewillgodowntoapproximatelyhalfofitspresplitvalue.,Dividends,EffectofstockdividendsandstocksplitsExample2:Whatdoyouseeinthisexample?,Thepricedoesnotadjustsolelybythesplitbecauseoftheinuenceofothermarketandeconomicevents,buttheadjustmentisveryclosethestockpriceisalmost1/2thatofthepresplitforthe2:1split,andthestockpriceisslightlymorethan4timesthatpresplitforthe1:4split.,Dividends,EffectofstockdividendsandstocksplitsExercise:,2513.332532,2million2.25million2million1.25million,Outline,DividendPolicies,Adividendpolicyisacorporationsdecisionaboutthepaymentofcashdividendstoshareholders.Waysofdescribingacorporationsdividendpolicy:Nodividends.Constantgrowthindividendspershare.Constantpayoutratio.Lowregulardividendswithperiodicextradividends.,DividendPolicies,Nodividends.Thecorporationsthattypicallydonotpaydividendsarethosethataregenerallyviewedasyounger,fastergrowingcompanies.Forexample,MicrosoftCorporationwasfoundedin1975andwentpublicin1986,butitdidnotpayacashdividenduntilJanuary2003.,DividendPolicies,Constantgrowthindividendspershareandconstantpayoutratio.Acommonpatternofcashdividendstendstobetheconstantgrowthofdividendspershare.Anotherpatternistheconstantpayoutratio.Manyothercompaniesinthefoodprocessingindustry,suchasKelloggandTootsieRollIndustries,paydividendsthatarearelativelyconstantpercentageofearnings.Somecompaniesdisplaybothaconstantdividendpayoutratioandaconstantgrowthindividends.Thistypeofdividendpatternischaracteristicoflarge,maturecompaniesthathavepredictableearningsgrowththedividendsgrowthtendstomimictheearningsgrowth,resultinginaconstantpayout.,DividendPolicies,Constantgrowthindividendspershareandconstantpayoutratio.U.S.corporationsthatpaydividendstendtopayeitherconstantorincreasingdividendspershare.Dividendstendtobelowerinindustriesthathavemanyprotableopportunitiestoinvesttheirearnings.Butasacompanymaturesandndsfewerandfewerprotableinvestmentopportunities,itgenerallypaysoutagreaterportionofitsearningsindividends.Manycorporationsarereluctanttocutdividendsbecausethecorporationssharepriceusuallyfallswhenadividendreductionisannounced.,DividendPolicies,Constantgrowthindividendspershareandconstantpayoutratio.U.S.corporationsthatpaydividendstendtopayeitherconstantorincreasingdividendspershare.Dividendstendtobelowerinindustriesthathavemanyprotableopportunitiestoinvesttheirearnings.Butasacompanymaturesandndsfewerandfewerprotableinvestmentopportunities,itgenerallypaysoutagreaterportionofitsearningsindividends.Manycorporationsarereluctanttocutdividendsbecausethecorporationssharepriceusuallyfallswhenadividendreductionisannounced.Forexample,theU.S.automanufacturerscutdividendsduringtherecessionintheearly1990s.AsearningspersharedeclinedtheautomakersdidnotcutdividendsuntilearningspersharewerenegativeandinthecaseofGeneralMotors,notuntilithadexperiencedtwoconsecutivelossyears.Butasearningsrecoveredinthemid-1990s,dividendswereincreased.4,DividendPolicies,LowregulardividendswithperiodicextradividendsBecauseinvestorstendtopenalizecompaniesthatcutdividends,corporationstendtoonlyraisetheirregularquarterlydividendwhentheyaresuretheycankeepitupinthefuture.Bygivingaspecialorextradividend,thecorporationisabletoprovidemorecashtotheshareholderswithoutcommittingitselftopayinganincreaseddividendeachperiodintothefuture.,DividendPolicies,Topayornottopaydividends-ruleofthumbIfacompanyincreasesitsdividendsorpaysadividendforthersttime,thisisviewedasgoodnewsitssharepriceincreases.Ifacompanydecreasesitsdividendoromitsitcompletely,thisisviewedasbadnewsitssharepricedeclines.,Outline,StockRepurchase,Corporationshaverepurchasedtheircommonstockfromtheirshareholders.Acorporationrepurchasingitsownsharesiseffectivelypayingacashdividend,withoneimportantdifference:taxes.Cashdividendsareordinarytaxableincometotheshareholder.Acompanysrepurchaseofsharesresultsinacapitalgainorlossfortheshareholder,dependingonthepricepaidwhentheywereoriginallypurchased.Ifthesharesarerepurchasedatahigherprice,thedifferencemaybetaxedascapitalgains,whichmaybetaxedatrateslowerthanordinaryincome.,StockRepurchase,MethodsofRepurchasingStockatenderofferopenmarketpurchasesatargetedblockrepurchase.,StockRepurchase,（1）AtenderofferAtenderofferisanoffermadetoallshareholders,withaspecieddeadlineandaspeciednumberofsharesthecorporationiswillingtobuyback.Thetenderoffermaybeaxedpriceoffer,wherethecorporationspeciesthepriceitiswillingtopayandsolicitspurchasesofsharesofstockatthatprice.AtenderoffermayalsobeconductedasaDutchauctioninwhichthecorporationspeciesaminimumandamaximumprice,solicitingbidsfromshareholdersforanypricewithinthisrangeatwhichtheyarewillingtoselltheirshares.Afterthecorporationreceivesthesebids,theypayalltenderingshareholdersthemaximumpricesufcienttobuybackthenumberofsharestheywant.ADutchauctionreducesthechancethatthecompanypaysapricehigherthanneededtoacquiretheshares.Dutchauctionsaregaininginpopularityrelativetoxed-priceoffers.,StockRepurchase,（2）OpenmarketrepurchaseAcorporationmayalsobuybacksharesdirectlyintheopenmarket.Thisinvolvesbuyingthesharesthroughabroker.Acorporationthatwantstobuysharesmayhavetospreaditspurchasesovertimesoasnottodrivethesharespriceuptemporarilybybuyinglargenumbersofshares.,StockRepurchase,（3）atargetedblockrepurchaseistobuyitfromaspecicshareholder.Thisinvolvesdirectnegotiationbetweenthecorporationandtheshareholder.Thismethodisreferredtoasatargetedblockrepurchase,sincethereisaspecicshareholder(the“target”)andtherearealargenumberofshares(a“block”)tobepurchasedatonetime.,StockRepurchase,ReasonstoRepurchaseStock1.arepurchaseisawaytodistributecashtoshareholdersatalowercosttoboththecompanyandtheshareholdersthandividends.Ifcapitalgainsaretaxedatrateslowerthanordinaryincome,whichuntilrecentlyhasbeenthecasewithU.S.taxlaw,repurchasingisalowercostwayofdistributingcash.2.toincreaseearningspershare3.totiltthedebtequityratiosoastoincreasethevalueofthecompany,StockRepurchase,ReasonstoRepurchaseStock1.arepurchaseisawaytodistributecashtoshareholdersatalowercosttoboththecompanyandtheshareholdersthandividends.2.toincreaseearningspersharebecausetherearefewersharesoutstandingaftertherepurchase.Theindividual“slices”arebigger,butthepieitselfremainsthesamesize.3.totiltthedebtequityratiosoastoincreasethevalueofthecompany,StockRepurchase,ReasonstoRepurchaseStock1.arepurchaseisawaytodistributecashtoshareholdersatalowercosttoboththecompanyandtheshareholdersthandividends.2.toincreaseearningspershare3.totiltthedebtequityratiosoastoincreasethevalueofthecompanyBybuyingbackstocktherebyreducingequitythecompanysassetsarenancedtoagreaterdegreebydebt.Example:supposeacorporationhasabalancesheetconsistingofassetsof$100million,liabilitiesof$50million,and$50millionofequity.Thatis,thecorporationhasnanced50%ofitsassetswithdebt,and50%withequity.Questions:Whatifthiscorporationuses$20millionofitsassetstobuybackstockworth$20million?,Answer:itsbalancesheetwillhaveassetsof$80millionnancedby$50millionofliabilitie