Posted by prudentinvestor > 2024-06-10 14:53 | Report Abuse

It takes some intelligence to understand my reasoning. I doubt you have it.

Posted by i3gambler > 2024-06-10 15:24 | Report Abuse

Come on lah, you can't even understand what is dilution due to DRIP.
RHB could give you 100 sen dividend with all DRIP,
And you would believe the DY =18%.

Posted by prudentinvestor > 2024-06-10 16:45 | Report Abuse

Still insisting that you are right. So pathetic. I suggest you go and enroll yourself for a Mathematics tuition class as soon as possible.

Posted by prudentinvestor > 2024-06-10 17:10 | Report Abuse

If I had bought RHB Bank at RM5.50 a share and should its management decide to increase its dividend per share this year to 100 sen and I reject the DRIP (of course this is not sustainable), then its yield for this year would become 18.18%.

Posted by jackjason > 2024-06-10 23:32 | Report Abuse

currently price still attractive with dividend yield above 7%.

Posted by jeffrey1166 > 2024-06-10 23:38 | Report Abuse

still cheap

Posted by jooortp > 2024-06-11 00:57 | Report Abuse

Dream is beautiful lol 100 sen world funds would buy RHB

Posted by jooortp > 2024-06-11 01:00 | Report Abuse

Best scenario would be full cash dividend without DRIP but if EPS keeps growing then not too big issue. We shall see

Posted by prudentinvestor > 2024-06-11 09:05 | Report Abuse

Every gambler has big dreams and that is to win big money.

Posted by i3gambler > 2024-06-11 16:09 | Report Abuse

In the BOD meeting,
CFO reported that the best dividend amount to pay out should be around 31.5 sen per share.
Director A asked: Can we pay out higher dividend, say 40 sen per share?
CFO replied: If we pay out 40 sen, next year we may face some cash flow problem.
Director B said: We don't care, you are highly paid, you go and think of a way.
CFO suggested: May be we can pay 40 sen with DRIP, the actual cash dividend payment will be 31.5 sen only.
Director C asked: How sure are you that shareholders will opt for DRIP?
CFO answered: Just give maximum discount.

Finish meeting, and all go for happy hours.

Posted by prudentinvestor > 2024-06-11 17:10 | Report Abuse

RHB Bank has implemented DRP for the past three years and yet the total amount of dividend paid in each calendar year has remained at 40 sen a share. This shows a slight dilution has no effect on the company's ability to maintain its dividend payment at 40 sen a share. How much do you think RHB Bank's dividend yield is?

Posted by skybursa > 2024-06-11 17:34 |

Post removed.Why?

Posted by jeffrey1166 > 2024-06-11 23:54 | Report Abuse

agree in sky view

Posted by Multibagger > 2024-06-12 06:05 | Report Abuse

just to share my take on DRIP...if you think RHB can grow your cash better than you can find elsewhere, take DRIP at discount and let them retain your cash and grow your wealth.
If you think you can find a better investment with better return, take the cash dividend and invest in this investment. By taking cash dividend does not necessarily mean you lose out due to dilution in your RHB holdings if you can still put the cash received in same or better return than RHB's return. The advantage of DRIP to investors is get additional shares at discounted price, without brokerage :)
I could not find any literature on dividend yield by incorporating diluted effect. Just as someone keep calculating gross profit margin using gross profit divide by cost, not revenue...and still think he is right while the standard used by the whole world is gross profit divide by revenue.

Posted by i3gambler > 2024-06-12 09:41 | Report Abuse

It is OK if the company want to pay out less cash because of want to use it some where else for better purpose.
1) It is OK to declare 31.5 sen, everyone understand that the DY = 5.72%.
2) It is also OK to declare 40 sen with DRIP, as long as we understand the Real DY is still the same 5.72%.

However, there are some problem with DRIP:
1) Unfair to the relatively small shareholders, it create unnecessary odd lot, if you opt to round down to the nearest 100 units, then you lost out some value.
2) Worst for the very small shareholders, for example, Last time I read prudentinvestor wrote that he never opted for Maybank DRIP because not worth it. Not worth because of the troublesome or odd lot? Or not worth it because the stamp duty plus service charged by Boardroom = RM15.00 is greater than the discount?
3) For my case for RHB DRIP, I opted for DRIP because after round down to the nearest 100 units, my take up rate is 97.6%, which is much higher than the overall 85% take up rate., I did not calculate but I think worth the RM15.00 cost.

However, if the company already confirm paying dividend with DRIP. Unless your holding is small that not worth the cost of doing so, please go for the DRIP, then decide whether to keep or dispose the extra DRIP units.

Posted by prudentinvestor > 2024-06-12 14:52 | Report Abuse

"2) It is also OK to declare 40 sen with DRIP, as long as we understand the Real DY is still the same 5.72%."
My real dividend yield is slightly more than 7.27% because I can dispose of my DRP shares for a slight gain. Your dividend yield is 5.72% because your DRP shares are worth nothing, just fictitious shares credited to your CDS account.

Posted by i3gambler > 2024-06-12 18:06 | Report Abuse

Hahaha.......prudentinvestor,
If you want, without DRIP you also can dispose part of your shares and claim DY = 7.27%.

Posted by prudentinvestor > 2024-06-12 21:18 | Report Abuse

Without DRP, I would have received RM400 dividend in total and RHB Bank's dividend yield for 2023 was 7.27%., assuming I had bought my RHB Bank shares at RM5.50 a year ago. Why do I need to dispose part of my shares? Are you confused or you just refuse to admit your mistake?

Posted by i3gambler > 2024-06-13 08:11 | Report Abuse

If you own 10 lots of RHB, and it give out a 1 to 10 bonus, you would receive 1 lot free.
You decide to sell the bonus unit and collect cash money,
Would you consider the cash money as dividend?

Same apply to DRIP lah, the cash you receive from selling the extra units is not dividend but actually selling your equity lah.

Posted by prudentinvestor > 2024-06-13 09:19 | Report Abuse

There are tens of investment banks in this country. Cite me just one, one only that works out dividend yield your nonsensical way. Please enroll yourself immediately in a Mathematics tuition class that specializes in calculating dividend yields.

Posted by prudentinvestor > 2024-06-13 09:29 | Report Abuse

Stop all the arguments little boy. Just Google "RHB Bank dividend yield".

Posted by Dias > 2024-06-13 17:47 | Report Abuse

Isn't that why it is called "Reinvestment"? Receive the full dividend and then give instruction for a portion of the dividend to be used to "buy" additional stocks at a discount.

Even if it is RM 500 cash + RM 300 DRIP'ed, the total RM 800 is still considered dividend and forms part of the dividend yield calculation.

Posted by prudentinvestor > 2024-06-13 21:00 | Report Abuse

This fellow is very confused. He thought dividends converted into shares can no longer be considered as dividends and keeps insisting that he is right.

Posted by smartly > 2024-06-13 22:14 | Report Abuse

do u know what is 死雞撐飯蓋

Posted by Bursino > 2024-06-13 22:14 | Report Abuse

Dividend 25 sen.
10 sen allocated for DRIP, to subscribe at 4.88 per share. DRIP odd lots can opt for Cash.
15 sen in Cash
In actual fact, the realized amount
of cash is more than 25 sen.
I had spent all the money.

Posted by smartly > 2024-06-13 22:16 | Report Abuse

do u know what is 死雞撐飯蓋

Posted by Bursino > 2024-06-13 22:31 | Report Abuse

I don't know. I don't even care. Most importantly is I know arithmetic.

Posted by i3gambler > 2024-06-14 08:45 | Report Abuse

prudentinvestor,
I already told you, Selling Bonus / DRIP units = Selling your equity because of dilution.
So difficult to understand meh?

Posted by prudentinvestor > 2024-06-14 09:38 | Report Abuse

So difficult to understand what others have written meh? You haven't cited any IB which calculates dividend this nonsensical way. Don't avoid my question. Turning your dividend into equity doesn't mean your dividend has disappeared. As far as others except you are concerned, it is still considered as dividend paid and taken into account when calculating RHB Bank's dividend yield.

Posted by prudentinvestor > 2024-06-14 09:41 | Report Abuse

The argument here is what RHB Bank's dividend yield is. All the investors here except you say it is 7.27%. You say it is 5.72%.

Posted by i3gambler > 2024-06-14 10:15 | Report Abuse

prudentinvestor，
A) Pay 31.5 sen cash dividend, Money out from the company = 31.5 sen / share.
B) Pay 40.0 sen dividend with DRIP, Money out from the company also = 31.5 sen / share.

The above both cases A and B, company pay out the same amount 31.5 sen / share,
But you choose to believe that the DY are different, 5.72% and 7.27%,
Halo, who is magician? The company or the shareholder?

Posted by jeffrey1166 > 2024-06-14 10:24 | Report Abuse

can fly

Posted by prudentinvestor > 2024-06-14 10:41 | Report Abuse

You look confused gambler. We are talking ONLY and ONLY about RHB Bank's dividend yield which you claim because of the DRP is only 5.72%. All the rest say it is 7.27%. Cite me one IB which concurs with you and says RHB Bank's dividend yield in only 5.72%.

Posted by prudentinvestor > 2024-06-14 10:43 | Report Abuse

Please do not beat around the bush gambler. Just give me the name of any investment bank which says that RHB bank has a yield of only 5.72%.

Posted by Multibagger > 2024-06-14 10:49 | Report Abuse

RHB's 2023 Annual Report put dividend yield as 7.3%. Please highlight to its Board of directors, CFO and auditor PWC.....major mistake in Annual Report :)

Posted by prudentinvestor > 2024-06-14 10:54 | Report Abuse

Little boy, just scroll up this page and look for financial highlight, RHB Bank's dividend yield is given there. Write to i investor and tell them that their way of calculating dividend yield is wrong.

Posted by observatory > 2024-06-14 14:41 | Report Abuse

At the risk of getting drawn into this argument, I can’t resist to put forward my two cents.

In my view, both sides have their points. What Prudent and many have stated stay true to the conventional way of dividend yield calculation, which is dividend declared over a 12-month period (40 sen) divided by the share price. This is the convention. Company annual report and analyst follow the convention. Else we could have endless arguments.

The way I understand it is, Gambler puts it is from the point of view for shareholders who DON’T want to get diluted by the DRIP. For this camp of people, they have no choice but to subscribe the DRIP.

For them, the starting point is 30 sen dividend, as the other 10 sen is tied up by the DRIP subscription.

Of course, one may argue, don’t they get an extra 10 sen worth of RHB share? Why not counting that as part of the dividend?

But for the “don’t want to get diluted” camp, that 10 sen of DRIP has two parts – one part is merely to keep up and don’t get diluted; another part is the extra “earns” from diluting others who don’t subscribe the DRIP offered at discounted price. For this camp of people, only the second part truly counts as “dividend”.

Based on this thinking, the “real” dividend will be somewhere between 30 sen to 40 sen.

However, whether it’s right or wrong to calculate dividend yield in this way is a moot point. What is important in the long run is the total shareholder return, not dividend return. And for this reason, it’s not advisable to invest merely based on dividend yield.

We may insist that the only acceptable way to calculate dividend yield is the conventional 40sen/ share price. However, to have a complete picture, one cannot ignore the dilution effects which, when compounded over the years through successive rounds of DRIP, will leave a noticeable mark. If the shareholder wants to quantify the effect, he will be back to some form of calculations like the above. Whether that calculation is called dividend yield or not is beside the point.

The opposite effect of DRIP is share buyback/ share repurchase. This is where US companies excel at (partly also driven by US tax consideration). Many US companies have low dividend yield if we were to follow the conventional way to only counting dividend distributed as “real” dividends (and ignore the buyback). But if buyback is included, the picture looks very different. For example, AutoZone has repurchased 84% of its share from 1997 to 2022. Look at the price chart for the effect.

Final point – no matter how we argue about dividend yield, it will have zero impact on how money managers view RHB. They are the one who set the share price. They consider many other factors besides the dividends.

Posted by Bursino > 2024-06-14 15:06 | Report Abuse

Agree. I bought my shares at 500 sen. I held it for a year. The company paid dividend 40 sen. Therefore my return is 8%. Done.

Posted by Bursino > 2024-06-14 15:09 | Report Abuse

a man convince against his will is of his opinion still

Posted by i3gambler > 2024-06-14 15:50 | Report Abuse

observatory,
Yes. Share Buy Back is equivalent to Dividend Payment.

Posted by prudentinvestor > 2024-06-14 16:12 | Report Abuse

As I have stated several times in my comments, RHB Bank has implemented DRP over the past three years and has issued several hundred million more shares. Yes, there is dilution no doubt but its yearly dividend per share has remained at 40 sen. Hence dilution has not impacted its ability to maintain its dividend payout at 40 sen a share. As for the calculation of dividend yield, we follow what the whole world is practising.

Posted by smartly > 2024-06-14 16:25 | Report Abuse

yes. no need to complicate thing. stay simple.

Posted by snowball88 > 2024-06-14 17:37 | Report Abuse

Share dilution happens with DRP but it doesn't affect the Dividend Yield, it's two totally different things. And share dilution is not necessarily a bad thing. It can be good or bad. If all of us opt for DRP, yes the shares will be diluted, but if the money that we reinvested thru DRP is put to good use by RHB (if RHB manages to get more than 5-6% returns from it), then it's a good thing. Similarly, if you opted not to take the DRP and reinvested the money in other things and got a 10% returns, then you are a genius and made the right call. Regardless of whether our shares has been diluted or not, the dividend yield is 7+%. That's why every literature you can find on the internet about RHB's Dividend Yield will state that the DY of RHB is 7+%. I agree with prudentinvestor and many of the others here on that point.

Posted by observatory > 2024-06-14 18:01 | Report Abuse

Agree. RHB maintained its DPS at 40sen from FY21 to FY23. On adjusted basis, dividend per share has actually grown.

However, many factors are also at play besides the dilution effect. The most important being the economic environment of pre-Covid (FY21) and post-Covid (FY23) greatly affect earnings outlook and dividend decisions.

For comparison, during the same period of FY21-FY23, Maybank, which also has DRIP (but stopped in 2023), DPS increased from 58sen to 60sen.

Hong Leong Bank, which do not offer DRIP, DPS increased from 50sen in FY21 to 59sen in FY23 (its YE is mid-year).

Anyway, as I mentioned in RHB forum before, shareholders who hold RHB mainly for its high dividend yield should be happy with the continuous 40sen DPS for the last 3 years. Just don’t look at or compare the share price with other banks.

As for shareholders who aim for total return, it’s important to watch multiple metrics besides dividends, and that becomes not so simple. Shareholders have opted for higher dividends for growth (which underpins share price appreciation).

Posted by observatory > 2024-06-14 18:03 | Report Abuse

There is a common yardstick on whether RHB has put its retained shareholder capital to good use. It’s whether it earns above its cost of equity (or cost of tangible equity to be more precise).

My rule of thumb for companies like RHB is COE at 10%. (For comparison, Hong Leong analyst put it at 10.9%).

During FY21, 22 and 23, RHB published net return on average equity was 9.6%, 9.6% and 9.5% respectively, slightly below bar.

Under TWP24, RHB aimed for 11.5% ROE by 2024. It’s probably a tall order as 1Q24 ROE was only 9.2%.

Posted by jeffrey1166 > 2024-06-14 18:23 | Report Abuse

make it simple

Posted by jeffrey1166 > 2024-06-14 18:23 | Report Abuse

keep buy while it low

Posted by prudentinvestor > 2024-06-14 21:03 | Report Abuse

"Yes. Share Buy Back is equivalent to Dividend Payment."
Weird, weird, weird. You got RHB Bank shares at a big discount and without having to come out a single sen and you don't consider it as a dividend payment. Haven't your additional RHB Bank shares increased the amount of your share portfolio? You got something. What do you get if a company buys back its own shares? Nothing! If share buy back can support a company's share price, it is ok. Top Glove started share buy backs when its share price was way above RM7. It is exactly the opposite of what you claimed.

Posted by observatory > 2024-06-14 21:44 | Report Abuse

I have nothing more to add on the dividend yield debate.

Prudent you’re right to point out there is a caveat on share buyback. When a company buys back its shares at a price above its intrinsic value, it destroys shareholder value. Top Glove’s folly has made share buyback a dirty word in Malaysia. Now every management in Malaysia would cite Top Glove as the reason why they don’t want to buy back their shares when they are hoarding cash and share price is depressed.

However, if the company buys below intrinsic value, remaining shareholders actually benefit. As the share base is shrunk, the earnings per share is boosted, making the remaining share more valuable. It’s the reverse of dilution effect. The slice of the cake gets bigger through buyback at below intrinsic value.

That’s why Berkshire Hathaway buys back its share too, but only when Warren Buffett believes the share price is value for money.

In the AutoZone example I cited where it bought back 84% of shares over 25 years, share price rose from $22 to $2,500.

Posted by i3gambler > 2024-06-15 10:40 | Report Abuse

1) ESOS is negative Dividend.
2) Private Placement is also negative Dividend.
3) Right Issue is also negative Dividend.

4) Share Buy Back:
4a) A positive Dividend at the time of buying.
4b) No effect when the company cancel the treasury shares.
4c) It is negative Dividend when the company sell the treasury shares back into the market.
4d) It is bonus units when company distribute treasury share as "share dividend".

I do not expect prudentinvestor can understand this.