The attraction here is the minimum 3.5% of the milk pool that...

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    The attraction here is the minimum 3.5% of the milk pool that goes to shareholders as a fully franked dividend before the farmers get the rest. ( Regardless of the milk price )
    The milk pool is typically around 50 % of total sales .
    At a price of around $2.20 this equates to a five percent dividend essentially guaranteed .
    I agree the upside is limited to about 7 percent of the milk pool or about a return of 11 percent on $2.20.
    So, the investment deal is this:
    I will always guarantee you a five percent dividend but will limit your upside to about an 11 percent dividend .
    The question is whether investors will like this deal.
    Suspect they might.
 
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