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Xinyuan Real Estate Co., Ltd. Message Board

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  • doublej7844 doublej7844 Aug 15, 2012 11:32 AM Flag

    Question about the dividend

    So if they are excluded from the outstanding shares, and do not pay a dividend, the actual "cost" of the dividend continues to decrease as they buy more shares (I think this point was made a while back by JB). So, where I'm going with this is: is it reasonable to assume that increases to the dividend should continue to be substantial (not just a penny per year, but 1 or 2 cents per quarter starting next year) because the company should continue to grow and the cost of the dividend (because of fewer outstanding shares) will be lower.

    The reason I am bringing this up is because I was thinking the other day, how even if this stock doesn't move over the next 5 years, I still make $4000 (800 annually) in dividend payments. But if they increase the dividend substantially over this time frame, that payment keeps increasing too. If hmmmm is arguing a $.10 per quarter dividend would do wonders for this stock, we might actually get there in a few years. Then my $800 annually gets to $2200, annually, plus imagine the share price increase. Now I'm thinking 2-3 years out I might double my investment AND be getting $1500/year in dividends. If so, I still don't think I would sell this stock.

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    • And this is why I prefer share buybacks for dividend stocks.

      Double, it was me who brought this up a long, long time ago. Thanks for giving it some light.

    • I think that XIN priority at this stage is to use availaible cash to fuel growth and to buy back shares. Dividens from a company prespective is 'lost' money. Also the CEO is the main shareholder, I do not think he personally needs to boost dividens as the current % on such big numbers of shares mean millions USD per year. I want to be in XIN because of capital gains prospects (1,000% - 5,000% potential in a few years) not because of future dividends, even if they were 10% p.a, small money compared to potential capital gains

      • 2 Replies to staccani
      • Staccani,

        I'm all for growth too, but what management does with dividends is for the shareholders. Increasing the dividend after reducing shares is a great way to reward those shareholders that have stuck by the company. It gives you incentive to hold on, just in case they repeat the process again.
        Dividends solidy a stock. There's a level of financial respect that's given to a stock that pays back their shareholders in cash.

        Trust me when I say, increasing dividends over time will have a profound positive effect on the stock price, so I'm all for it!

      • While I agree with what you say, I'm not used to getting paid to wait! That's what I'm pointing out.

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