The most recent dividend Regis paid was a final dividend in 2022...

The most recent dividend Regis paid was a final dividend in 2022 of 2c per share, an outlay of $15 million. I don’t think they’d reinstate a dividend given their capital requirements, but anything is possible. The last I heard they were looking at somewhere north of $450 million for the McPhillamys build. They are currently in a net debt position so would need to raise a large proportion of the funds required. If they paid a dividend in the lead up you may find yourself in a position of accepting a dividend in one hand and contributing it back as equity with the other, or worse, being diluted if not offered equity when it is raised.

My view is the company is most likely to build cash until McPhillamys is funded and built. If production meets expectations and cash flows are comfortably servicing any debt requirements then they will be in a position once more to consider dividends amongst the competing requirements for capital. Different altogether if they put McPhillamys on ice.

Shelving a dividend is an unpopular decision and directors are very sensitive to the backlash. This is why they they tend to be conservative about payout ratios. They try to ensure that the level of dividend can be sustained even when they have a poor half or two. So having recently felt the sting of halting dividends you can be certain they won’t reinstate a dividend until they are certain they can carry it through for a while.

If you really think about it directors generally do a poor job of educating their shareholders about the future requirements for capital. Most of us, if we ran a company on a 100% ownership basis, would be well attuned to our business’ need for capital, we would leave it in the business to sustain and grow it or take a dividend if it was just collecting dust. For some reason it’s entirely different when we just own just part of the business and someone else is running it “I must get a consistent dividend” The psychology of that is quite interesting.