Special dividends should be applauded when the alternative is a...

Special dividends should be applauded when the alternative is a risk of destroying the value of shareholder capital.

But in ARB's case the special dividend is a bit of a misnomer because its not really a return of capital per se, but because the board activates the DRP in respect of special dividends, all that really happens is that the issued capital base expands and the special dividend becomes a mere mechanism by which to expunge surplus franking credits.

So I'm not really a huge fan of ARB's "special dividend" policy. I'd far rather they just pay out what they believe they can afford to do (in the context of the board's long-demonstrated aversion to being beholden to any banks), instead of causing the extra shares to be created which thereafter need to be serviced forever.

Besides, when a business is generating a 20% return on the incremental capital it invests, that's better than I am able to achieve by investing in my own right, so my preference would be for that business to give me less capital and for it to retain more in order to invest at that superior ROCE rate.

Of course, I recognise it is not always possible to reinvest meaningfully in a given business (due to physical limitations, such as scarcity of resources, industry structure, market size/maturity, supply chain limitations etc.).