"Rain" of dividends into shareholders' accounts

Cash flow from listed enterprises is expected to flow tens of thousands of billions of VND into shareholders' accounts in the last months of the year through cash dividend payments and even treasury stock purchases.

PV GAS's Thi Vai LNG terminal. Photo: Duc Thanh

Big dividend announcement

Earlier this week, PetroVietnam Gas Joint Stock Corporation (PV GAS) officially set the date to receive 2023 dividends for shareholders. The 60% cash dividend rate was previously set at the mid-year Annual General Meeting of Shareholders. This is a record high level never recorded in the history of PV GAS's operations in both relative and absolute terms.

With nearly 2.3 billion shares in circulation, PV GAS will pay more than VND 13,780 billion to shareholders' accounts on November 28, 2024. On the same day as the right to receive cash dividends (September 16), PV GAS shareholders also have the right to receive shares to increase capital from equity capital, at a ratio of 50:1.

PV GAS is not the only manufacturing company that has announced dividends in recent days. Just the group of oil and gas stocks in which the Vietnam Oil and Gas Group (PVN) owns a controlling stake has had several “big guys” paying out “rain” of dividends this time.

Most recently, PetroVietnam Fertilizer and Chemicals Corporation (Phu My Fertilizer) completed the list of shareholders receiving dividends for 2023 on August 22. According to the plan, on September 24, for each share held, shareholders will receive 2,000 VND in their accounts. The total dividend payment is 783 billion VND.

Meanwhile, for shareholders of Binh Son Refining and Petrochemical Joint Stock Company, the entire 2023 dividend will be paid to shareholders on the list on October 15. Although the rate is not too high, with more than 3.1 billion shares in circulation, BSR plans to spend VND2,170 billion for this dividend.

In total, the three oil and gas companies will pay more than 16,700 billion VND. Of which, nearly 15,667 billion VND will go to the parent shareholder PVN, and the remaining more than a thousand billion VND will go to the accounts of small shareholders.

Many “golden goose” have also officially announced their dividend payment schedules. Hau Giang Pharmaceutical Joint Stock Company paid the second dividend in 2023 in cash at a rate of 35%, thereby completing the annual dividend plan with a total rate of 75% - much higher than the average of the past 3 years (35-40%), surpassing previous years. Foreign shareholders Taisho Pharmaceutical and State Capital Investment Corporation (SCIC) received VND233 billion and VND198 billion, respectively, in this payment alone.

Thien Long Group also paid an additional 2nd dividend at a rate of 10%, thereby paying off the cash dividend and leaving only a part of the stock dividend (10%) for the whole year 2023. Some other enterprises paying quite high rates such as International Food Company - IFS (24%), Cat Lai Port Joint Stock Company (26%)... will close their rights during this time. Rang Dong Light Bulb and Vacuum Flask Joint Stock Company has even paid off the 2023 dividend (rate of 50%) since April 2024 and has just closed the right to pay the first interim dividend on August 19 at a rate of 25%.

Cash flow reinvested?

According to regulations, dividends must be paid in full to shareholders within 6 months from the end of the annual general meeting of shareholders. Therefore, this is also the peak time for businesses to prepare for this activity.

Not only tens of thousands of billions of dong in dividends, Vinhomes Joint Stock Company also suddenly announced a plan to buy treasury stocks with an expected amount of more than 13,760 billion dong in early August. This plan is being consulted with shareholders until September 15 and can be implemented quickly after completing procedures with the management agency.

Although business results decreased compared to the record revenue and profit achieved in 2022, the undistributed profit after tax by the end of 2023 was approximately VND 16,880 billion, more than enough for PV GAS to pay the above dividend. Not to mention, with the updated debt ratio to the second quarter of 2024 less than 25.5%, the "giant" in the gas industry is still confident about financial leverage after spending a large amount of money to pay dividends.

Billions of dollars from businesses flow into shareholders’ accounts. A significant portion of this will go to major state shareholders such as PVN, SCIC, etc., and will be distributed according to investment and business plans.

In a recent sharing about SCIC's investment orientation, Mr. Le Thanh Tuan, Deputy General Director of SCIC, said that he will further promote investment in the stock market, first of all focusing on investing in enterprises in SCIC's own ecosystem. In addition, SCIC has asked SCIC Investment One Member Co., Ltd. (SIC) to develop a capital increase plan, so that SCIC will participate more actively in the stock market through this unit.

Along with that, a portion of dividends and money from buying treasury stocks in investors' accounts can also be reinvested back into the market when there is an opportunity, especially in the context of the valuation of the Vietnamese stock market becoming more attractive after a strong correction.

According to analysts from VNDirect Securities Corporation, the P/E ratio of VN-Index in mid-August reached -1 standard deviation, thereby stimulating the cash flow to "catch the bottom". This cash flow is supported by the prospects of the Vietnamese stock market in the medium term from the next 6-12 months. In particular, positive business results in the second quarter of 2024 also reinforce the forecast that the whole market's profit could grow by 18% this year.

Also according to VNDirect, the scenario of the US Federal Reserve (Fed) lowering the operating interest rate 2-3 times from now until the end of 2024 is gradually becoming real and will reduce pressure on the exchange rate. From there, the State Bank can be more flexible in injecting liquidity into the system, especially in the fourth quarter, thereby helping to maintain the domestic interest rate level at an attractive level to support economic growth.

“We still maintain our view that the VN-Index could close 2024 at 1,300-1,350 points in the base scenario and could be above 1,400 points in the positive scenario when the Fed lowers the operating interest rate as the market expects and the State Bank loosens monetary policy,” VNDirect assessed.

The 1,200-point support zone is considered by experts to be a good opportunity for long-term investors to consider increasing their stock holdings and building an investment portfolio for the next 6-12 months.