BYL 0.00% 8.0¢ brierty limited

Ann: Brierty confirms final dividend, page-3

  1. 912 Posts.
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    Obviously it would lend to above average SP growth. This isn't necessarily a good thing. You will always end up with more money if you slowly compound a large amount of money than if you distribute the money.Think about the numbers of my example below, you have a higher share price by retaining earnings but it comes at the cost of a lower overall return if the return is too low. Growth is only good if the return is good. BYL isn't too bad because it is achieving 15% RoC so it is making more than I could make by reinvesting the return (based on market averages).

    Company 1
    assume fixed at RoC 20%
    assume fixed Yield 10% (hence fixed PE too)
    Payout ratio 100%
    Starting SP $10
    Column 1 Column 2 Column 3 Column 4 Column 5 Column 6
    0 Year 1 2 3 4 5
    1 Earnings $    1.00 $    1.00 $    1.00 $    1.00 $    1.00
    2 DPS $    1.00 $    1.00 $    1.00 $    1.00 $    1.00
    3            
    4            
    5 Dividends received $    5.00        
    6 SP after 5 years $   10.00        
    7 Total return $   15.00 (After 5 yrs)      

    Company 2
    assume fixed at RoC 20%
    assume fixed Yield 10% (hence fixed PE too)
    Payout ratio 30%
    Starting SP $10
    Column 1 Column 2 Column 3 Column 4 Column 5 Column 6
    0 Year 1 2 3 4 5
    1 Earnings $    1.00 $    1.07 $    1.14 $    1.23 $    1.31
    2 DPS $    0.30 $    0.32 $    0.34 $    0.37 $    0.39
    3            
    4            
    5 Dividends received $    1.73        
    6 SP after 5 years $   13.11        
    7 Total return $   14.83 (After 5 yrs)      
    8            
 
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