Forum Archive Index - May 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi winner69,

>
> 
>Snoopy - you talked about the dilution of your interest in Telecom
>with the share placement they made last year etc
> 
>Have you noticed that this has already shrunk your dividend by 6%.
>If they hadn't issued the 90 million shares last year the 5 cent
>dividend would have been 5.3 cents cents. You said "It would
>alienate too many investors if they cut them (dividends) further!".
>Wonder if they have noticed?
> 
> 

It is true that any new shares issued will dilute the earnings per 
share.  This is *not the same* as cutting the dividend per share.  
Telecom since they have become a growth share (sic) have a policy of 
only paying out approximately half their income as dividends.

The other half of that income that is not paid out goes as 
investment back into the company and to paying off debt.   The share 
placement is another way of helping to do this.  Despite the dilutory 
effect of the share placement, I feel the shareholders are better off 
with the placement than without it.

SNOOPY



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