Dividends! Massive news!

Hi all, I think the announced move to start returning capital to shareholders is massively significant and will be the catalyst to creating a share price that better represents the true value of MML.

Once dividends commence being paid, the market will no longer be able to ignore MML, especially as investors chase yield.

I have been playing with some scenarios based on various profit numbers and payout ratios, and what share price would be achieved should the market attribute a 5% yield to the dividend. You can see that the resulting PER is still quite reasonable in all three scenarios. I’d be interested in what others think of my assumptions. Does anyone know what the payout ratio was last time MML paid dividends?

Base Case

NPAT - $80 000 000 AUD

EPS - $0.38

Payout Ratio 40%

Dividend - $0.15

Market assumed yield of 5% = Share Price $3.00

PER 7.9

Pessimistic case

NPAT - $60 000 000 AUD

EPS - $0.29

Payout Ratio 30%

Dividend - $0.085

Market assumed yield of 5% = Share Price $1.70

PER 5.9

Optimistic case

NPAT - $100 000 000 AUD

EPS - $0.48

Payout Ratio 50%

Dividend - $0.24

Market assumed yield of 5% = Share Price $4.80

PER 10