Another interesting insight I gained is about the DRP. It's seen as an efficient way to pass franking credits to investors, where they would otherwise go unused. The high DRP participation rate is also important to the dividend payout ratio - if participation dropped, they would likely need to cut dividend. This intuitively makes sense, but I had never thought about it before.
It also reveals a potential future problem... if the share price stops rising steadily, and DRP participation falls, then divs (which are not high in the first place) may be cut. This is an undesirable feedback cycle which could cause the share price to fall, and reduce participation further. It's not going to ruin the business, but it could trigger a clear end to SNL's run of elevated P/E.
SNL Price at posting:
$37.80 Sentiment: Hold Disclosure: Held
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