With respect to everyone that has commented on this thread, i still have not heard a constructive argument as to why buy backs are better than fully franked dividends.
The best argument is from Emmanuel Datt, although he doesn't compare buy backs with ff dividends. However, I think he makes a good point in terms of the off market buy back which effectively allows shareholders to opt in or out. This gets around the issue of different tax circumstances for different investors in that each individual can choose to participate or not.
So i have no problem with an off market buy back structured in the way he proposes. However i think my point stands for the current on market buy back.
I think most people are missing my point. It has nothing to do with being obsessed with dividends and wanting a sugar hit. I have been invested in coal shares for more than 3 years.
My point is that a fully franked dividend is just about the most tax effective way to get cash out of a company. And it gives shareholders the ultimate flexibility to use the profits of the company in the way they see fit.
If a shareholder thinks the stock is cheap and wants to create the same outcome as a buy back, they can simply use the dividends to buy more stock.
I reckon if WHC made an announcement yesterday like TER did today (quarterly divs, 60-90% NPAT), WHC would be $10 already.
WHC Price at posting:
$7.89 Sentiment: Buy Disclosure: Held
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