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Historical Dividend Analysis of Target Company
QUESTION
Prepare and submit a historical dividend analysis of your target company in power-point or similar software. Your target company should be a US listed public company, mid-cap or small-cap in size, that pays a dividend. For the definition of Midcap, select a company that is less than $14B in market cap. In the video, I suggest $12 Billion but giving you a little flexibility to find a company you are interested in by going a little bigger. Remember, it must have paid a dividend in the past! This is an individual exercise.
Assignment Overview
Objective: Analyze how the firm has returned cash to shareholders
Historical Dividend AnalysisIdentify how much the firm has paid in dividends over the past 5 years?
How much stock has the firm repurchased over the past 5 years?
Has the firm paid a special dividend?
What is the firms dividend yield? How has it changed over the past 5 years?
What is the firms payout ratio? Has it been consistent?
Compare the firms dividend yield and payout ratio to the industry (or its top 3-5 competitors).
Summarize and provide any other comments that you feel are relevant to the firms’ dividend policy.
| Subject | Business | Pages | 5 | Style | APA |
|---|
Answer
Analysis of Wabtec House Incorporation
Institution
Overview of the Company
- Web Corporation is a publicly listed company which engages in distribution of stamping foils and heat transfer labels
- Wabtec Corporation employs the local graphic design to and engravings
- The company also supports various products such as The company provides warranty to its clients, which has enabled it to gain a great trust from them.
- Though its headquarters is based in the United States, it has branches across the globe.
- Dividends are amounts distributed to the shareholders out of the realized profit, in return for the amount they have invested in the company.
- The distributed dividends have a great influence on the value of the company as investors tend to prefer companies which regularly distribute dividends.
- The dividends are distributed in share basis. This means that shareholders with higher shares would earn more dividends, as compared to those with few shares.
- Dividends are distributed after deducting all expenses, and tax paid.
- Special dividends are paid not on ordinary dates, but on special dates which are determined by the board of management.
- Payment of special dividends can either be done on request by the shareholders, or upon a certain special audit which us authorized by the shareholders.
- Wabtec has never distributed any special dividends in the past five
- Instead, the company has paid normal dividends which can be summarized as follows;
|
Year |
2019 |
2018 |
2017 |
2016 |
2015 |
|
Cash Dividends |
$0.48 |
$0.48 |
$0.44 |
$0.36 |
$0.28 |
|
Oustanding Shares |
191,699,193 |
96,614,946 |
96,034,352 |
95,425,432 |
91,836,106 |
|
Total Value |
$46,375,174.08 |
$46,096,488.96 |
$42,255,114.88 |
$34,353,155.52 |
$25,714,109.68 |
- Stock repurchased are the number of shares which have been redeemed from members.
- The aim of shares redeeming or repurchasing is to reduce the gearing level.
- Only shares which are listed as redeemable can be repurchased after a certain duration.
- Share repurchase has the effect of reducing the number of outstanding shares, while increasing the dividends realizable by every shareholder.
- Just like shares issue, shares repurchase must also be approved by majority of the shareholders in an annual general meeting.
- The table below summarizes the value of shares number stock/ shares which have been repurchased.
- The negative value of the shares redeemed is an indication that the company has never redeemed any shares in the past five years.
- Instead more shares have been authorized and issued.
- Consequently, the ownership of the company has been consistently diluted in the past five years.
- Being a publicly listed company, Wabtec is required to retain a maximum of 60% of its net income, which is a restriction on its dividends distribution.
- With this cash management, the company has been signaling the market of its constraints to pay cash dividends.
- The shareholders should therefore expect very minimal or zero cash dividends in future
- References
- Webtec Incorporation (2020). Annual Financial Reports. Retrieved from:https://ir.wabteccorp.com/investor-relations/annual-reports.