logic says the Divy will be cut to 2 percent or scrapped entirely to save cash.
IMO, SAN will follow spains Telefonica , who eliminated its divvy 13 months ago.
Do you know what will happen if they cut or even scrap their dividend? The same that happened to TEF; shareholders will leave the ship and within a year SAN will plunge rock bottom and potentially some other big, well capitalized bank will pick up what's left for a bargain.
Bottom line, SAN is well aware of this. Therefore they do everything to keep their shareholders happy, even little guys like you and me.
I consider SAN a long-term investment in part due to it's high dividend.
Just my 5 cents
Do you know their balance sheet? Or how is it possible to compare TEF with SAN? And after your study you should listen to their anouncment regarding rising bottom line over the next three years.
You guys should drop this dividend #$%$. Now, I do think the dividend may be cut to 60 cents from the current 80 cents -- next year. But, a cut looks hypothetical, based on this year's earnings and such a cut may not happen as earnings should continue to rise this year and next and the next. And the stock just might go up not down after a cut, if they resume paying the dividend in cash not shares, though it would drop the common initially. A 60 cent dividend still makes this a $10 stock (ballpark).
No one in the investment community likes the dividend in shares concept. It is dilutive and exactly how dilutive a longer discussion, and it really amounts to a cash outlay as it is equivalent to a share sale to make the dividend (it is handled a bit different in the accounting). And Santander knows it cannot continue the share-based dividend. But the good news is that earning are recovering and should recover easily by the end of 2014 to continue the current dividend. It is clear to me that the bank is anticipating this and that is part of the reason they did not cut the dividend this year.
Earnings the second quarter I think will be a positive surprise, if so this may go to $8. If not and they come in low, you might get the $6 again but better get in quick cause this bank is not going anywhere.
My target is $9.50 for next year. Plus the divi.
If SAN's dividend is really just more newly-issued shares, why don't they make it a 20% dividend "yield", or perhaps 30% or 40%? Heck, make it a 100% dividend yield, double everyone's money every year. Or would you guys that love the "dividend" so much have a problem with that?
Santander's dividend is 12% not 9%, and the dividend has been cut to 0.6 EUR already (it used to be EVEN HIGHER that this). I actually forsee either extensive share buybacks or increased dividends in FY 2014