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  1. 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 Analysis

    Identify 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.

 

References

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