What I don't understand is why these high growth roll-up companies pay dividends.
GEM made $53m last year, increased debt by $230m and raised $220m. Yet they are planning to pay $85m in dividends this year which must be close if not higher than normalised earnings.
I know there is a dividend reinvestment plan but I don't see the point of paying such high dividends whilst issuing shares and debt. Higher debt increases risk, and dividends don't benefit shareholders because holdings are diluted through equity raises.
I'm probably missing something and would appreciate it if someone could set me straight.
GEM Price at posting:
$4.28 Sentiment: None Disclosure: Not Held
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