SUM - Summerset Group

[Sauce]

PS Thanks for your posts Sauce.

I should have said Snap percy, because as I was writing my diatribe, you posted my all my exact points using but using 5% of the space compared to my long winded ramble.

[BIRMANBOY]

Firstly Pierre, there is a timing issue involved. Investing for growth involves how much time?? 2 years, 5, 10 I have no idea so I may be unlucky and have to wait five years before it returns a decent dividend. In the meantime I am getting anywhere from 5 to 10 % return fom other "good divvie producers". Growth is for young investors with plenty of time on the horizon. As to your suggestion of "selling a few shares" here and there. Impractical and cumbersome and brokerage costs will nullify any gains.

"Dividends I can spend.....growth I cant and I may not be around in 5 years so why put money in it"

Ignoring tax implications for a moment, investing for capital growth or for dividend income seems pretty much the same to me - either way we're aiming to maximise the gain on our dollars.

If you think the SP will show significant growth but the company wont pay much of a dividend then why not simply take your return from the capital gain? Sell a few shares when you need a "dividend" and leave the remainder to carry on growing.

[pierre]

Where would you put new money today RYM or SUM?

RYM is yielding 2.36% at today's price - SUM would have to pay 4.4cps this year to equal that return.

So, assuming we're going for growth, which company has the most potential for capital gain? RYM from its current SP of $3.56 or SUM from its price of $1.88?

[percy]

Firstly Pierre, there is a timing issue involved. Investing for growth involves how much time?? 2 years, 5, 10 I have no idea so I may be unlucky and have to wait five years before it returns a decent dividend. In the meantime I am getting anywhere from 5 to 10 % return fom other "good divvie producers". Growth is for young investors with plenty of time on the horizon. As to your suggestion of "selling a few shares" here and there. Impractical and cumbersome and brokerage costs will nullify any gains.

My mother "invested" $10,000 in AGC [then owned by Westpac] and enjoyed 6% divies[which she spent] .At the end of ten years she was repaid her $10,000.Had she invested the same $10,000 in Westpac she would have received approx the same amount in divies [not to start with],and her capital would have increased to over $24,000.

[pierre]

Good story Percy - a few bucks in brokerage costs to sell some shares each year to get her income would hardly have been noticed.

Still, just as well she put her dollars into AGC and not a "blue chip" like Blue Chip for example.

[Sauce]

Growth and dividends are like oil and water..dont mix very well.

RYM is probably very rare in that its growth requires a lot of capital, yet it features high dividends and growth without sticking its hands out for external capital.

But growth and dividends do not have to be mutually exclusive. There are a number of businesses with low capital requirements that spin off a ton of cash, have high dividend payout ratios, and high growth rates. But they also tend to have very high share prices that preclude them having good dividend yeilds because the market is willing to pay for the growth.

The likes of Trademe on the NZX and Monadelphous in AUS spring to mind but there are plenty of them.

No good to Birmanboy though, which is his point.
Cheers

[BIRMANBOY]

I realize the dividend is low....doesnt really matter why... although I do believe you if you say its more to do with market premium. Its like owning a car that doesnt go...doesnt matter if its because the engine is missing or the tyres are flat. Bottom line is it wont go...the dividend low...why is somewhat immaterial to me although I appreciate that as an owner of the share you are looking for reasons to hold on and growth factors are good I will give you that. I'll probably be a client myself very soon. Maybe I'll wish i had some shares then and I can get some extra bikkies at morning tea by impressing the staff I am a shareholder

Hi Pierre

I think thats a good point for us younger folk (to ejoy capital growth as well as divis) but for older characters I think its to risky to rely on realising capital gains because of volatility.

Birmanboy makes a very fair point in that if you are old you can't really hope to live off 2.5% minus tax pa even if its growing at 15% a year.

But i'm not sure he realises the dividend yield has less to do with RYMs dividend policy and more to do with the market premium for the shares.

Cheers

Sauce

[BIRMANBOY]

If IF and another IF..you're missing the point Percy....Timing is the key. What you dont realize is most older folk dont think in terms of 10 or 15 or 20 year horizons. They want a return NOW...why is understandable unless you are young and indestructible ...Like Percy?

My mother "invested" $10,000 in AGC [then owned by Westpac] and enjoyed 6% divies[which she spent] .At the end of ten years she was repaid her $10,000.Had she invested the same $10,000 in Westpac she would have received approx the same amount in divies [not to start with],and her capital would have increased to over $24,000.

[percy]

I realize the dividend is low....doesnt really matter why... although I do believe you if you say its more to do with market premium. Its like owning a car that doesnt go...doesnt matter if its because the engine is missing or the tyres are flat. Bottom line is it wont go...the dividend low...why is somewhat immaterial to me although I appreciate that as an owner of the share you are looking for reasons to hold on and growth factors are good I will give you that. I'll probably be a client myself very soon. Maybe I'll wish i had some shares then and I can get some extra bikkies at morning tea by impressing the staff I am a shareholder

Had you brought some RYM 5 or 10 years ago,you would be sitting at the top table enjoying hot sausage rolls,and freshly made muffins.!!!!!!

[ENP]

Why are NZ investors so obsessed about dividends?

I'd rather the company retains it's earnings and grow them for me, than paying it out to sit in my bank account so it can sit there until I do something else with it.

If a comapny is returning 15% or so return on it's retained equity, then by all means keep the dividend. I don't want it if you can make 15% on it for me.