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  1. #61
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    Quote Originally Posted by percy View Post
    RYM [and I expext SUM] pay out a small % of their profit.What you must consider is how wisely they put to use the money they don't pay out.If they can make 15% plus on that money you will enjoy great compounding profits,which will drive the SP.
    If you can earn over 15% you are indeed best to look at company's that pay out most/or all of their profit.
    I agree percy well put. And their true economic returns is actually much higher than 15% (its run around 30 - 33% annually on shareholders funds invested at the start of each year).

    Its a bit confusing because of the way they book revaluations on to the balance sheet, so you have strip those gains out to see what shareholders have had to contribute and then work out the return on that.

    Cheers

    Sauce

  2. #62
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    I suspect perhaps what people are noticing is the low dividend yield which is more related to a high market value than a low payout ratio.

  3. #63
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    If you think its dividend payout is "healthy" you havent looked very far. Helathy is relative to what? Its growth may be good and the future may be very good but the dividends are paltry. Two different things. Dividends I can spend.....growth I cant and I may not be around in 5 years so why put money in it?
    Quote Originally Posted by Sauce View Post
    Actually I believe RYM have a very healthy dividend payout ratio of 50%.

    The cashflows that are reinvested in villages over and above the other 50% of shareholders funds that is retained (not paid out as a dividend) represents cash from the refundable license to occupy, and could not be paid out as dividends anyway. It is this ability for RYM to "Recycle" its capital from village to village that allows it to generate such high returns.

    Would you prefer they paid out 100% of underlying profits? Not me. The 50% "shareholder funds" they retain for growth are able to generate a 30% internal rate of return. This is BECAUSE they can recycle the capital by generating ever growing refundable occupancy right cashflows.

    This is so so much better than getting more in the way of dividends, that you should consider losing your left arm to find businesses like it, particularly when the downside risk is reasonably limited (downside risk is arguable I suppose, but at least in my view).

    As an owner, I know I can't get a 30% compounding rate of return if I am holding the cash, so I prefer them to keep as much of their underlying profits as they feel they can safely put to work at those excess returns. That said, from my perspective, Ryman (and perhaps SUM also) are, and will always be, a great payer of dividends. With those dividends growing fast.

    Regards,

    Sauce

  4. #64
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    Quote Originally Posted by BIRMANBOY View Post
    If you think its dividend payout is "healthy" you havent looked very far. Helathy is relative to what? Its growth may be good and the future may be very good but the dividends are paltry. Two different things. Dividends I can spend.....growth I cant and I may not be around in 5 years so why put money in it?
    You are talking about the low dividend yield. The yield is low because the market has bid the price up to the point that the yield is low. It is NOT related to retirement villages having a low payout ratio. A 50% payout ratio is high for company growing as fast as RYM.

    It would be better to blame the fact that too many people are chasing RYMs healthy dividend and strong growth prospects, rather than label the retirement sector bad dividend payers.

    Cheers

  5. #65
    percy
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    Quote Originally Posted by BIRMANBOY View Post
    If you think its dividend payout is "healthy" you havent looked very far. Helathy is relative to what? Its growth may be good and the future may be very good but the dividends are paltry. Two different things. Dividends I can spend.....growth I cant and I may not be around in 5 years so why put money in it?
    Give yourself an incentive to be alive in 5 years time.
    PS Thanks for your posts Sauce.
    Last edited by percy; 22-08-2012 at 04:20 PM.

  6. #66
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    Its got nothing to do with me...I just do what I'm told. An incentive would be something along the line of..."congratulations we have just discovered a cure for old age" Waiting for Ryman or SUM to stop spending money on new bedsits and return some decent dosh to the investors would too but I'm not holding my breath.
    Quote Originally Posted by percy View Post
    Give yourself an incentive to be alive in 5 years time.

  7. #67
    Senior Member pierre's Avatar
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    "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.
    "Don't be afraid to take a big step if one is indicated. You can't cross a chasm in two small jumps." David Lloyd George

  8. #68
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    If you look at the original post that may clear up any confusion. The yield is low..we agree on. SO that means any money you put in now gives a crap dividend. If you own the shares at a much lower price then it will look better. I can get much better returns from a dozen other shares and bonds. Any business that has to use their cash reserves to grow, whether its a retirement village or not, is going to be focussed on growth not dividends. As I have already said it may be a good long term grower but for the immediate future its a poor use of funds for someone wanting a decent dividend. Growth and dividends are like oil and water..dont mix very well.
    Quote Originally Posted by Sauce View Post
    You are talking about the low dividend yield. The yield is low because the market has bid the price up to the point that the yield is low. It is NOT related to retirement villages having a low payout ratio. A 50% payout ratio is high for company growing as fast as RYM.

    It would be better to blame the fact that too many people are chasing RYMs healthy dividend and strong growth prospects, rather than label the retirement sector bad dividend payers.

    Cheers

  9. #69
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    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

  10. #70
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    Quote Originally Posted by BIRMANBOY View Post
    If you look at the original post that may clear up any confusion. The yield is low..we agree on. SO that means any money you put in now gives a crap dividend. If you own the shares at a much lower price then it will look better. I can get much better returns from a dozen other shares and bonds. Any business that has to use their cash reserves to grow, whether its a retirement village or not, is going to be focussed on growth not dividends. As I have already said it may be a good long term grower but for the immediate future its a poor use of funds for someone wanting a decent dividend. Growth and dividends are like oil and water..dont mix very well.
    Hi Birmanboy. I totally agree with everything you just wrote except that last sentence, when its related specifically to RYM (as your original post did).

    The reason I don't agree with your last point is because a 50% payout ratio is quite high. Indeed a 50% payout ratio would often feature in income portfolio's - but as you point out not at the price you have to pay currently for those dividends.

    Otherwise, yes, thats true.

    Cheers

    Sauce

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