Auckland International Airport Limited (AIA)

[quartzpurple]

Guys,

Companies who initiate dividend reinvestment are likely to be strained in their cash position. It is just a sugar-coated way of not cutting your dividend outright.

They pay you the dividend but take it back with this scheme called "dividend reinvestment". If you refer to the cash flow statement, cash flow after paying dividend is almost zero.

If something happens to the operation, it is very likely they would have to borrow more to keep them a float because cutting dividend sends a very negative signal.

I think it is a waste of company resources. I think the post office, Computershare, and the financial institutions who handle all these transactions have more to gain than the common shareholders!

[percy]

Yes you are right.they hate paying out the cash when short and often have to borrow to pay divie.yes also saves them from cutting divie.
However with divie reinvestment you have the choice.cash or shares.EBO you have right to sell bonus shares back to the company.Still I prefer to keep them.

[macduffy]

Guys,

Companies who initiate dividend reinvestment are likely to be strained in their cash position. It is just a sugar-coated way of not cutting your dividend outright.

They pay you the dividend but take it back with this scheme called "dividend reinvestment". If you refer to the cash flow statement, cash flow after paying dividend is almost zero.

If something happens to the operation, it is very likely they would have to borrow more to keep them a float because cutting dividend sends a very negative signal.

I think it is a waste of company resources. I think the post office, Computershare, and the financial institutions who handle all these transactions have more to gain than the common shareholders!

Yes, it's sometimes a bit of a cautionary sign, especially with companies who resort to having their dividend reinvestment schemes underwritten, in effect paying out no cash but heavily diluting their equity.

But I'd be careful not to generalise too much on this. A stongly growing company will need to increase its equity base and dividend reinvestment can be a cost effective method for both shareholders and the company. EBO would probably be an example of this. Similarly, the big Aussie banks are continually expanding their balance sheets and need more capital. Entitlement issues and SPP's play a bigger part here of course but reinvestment of divs over the years has been a great way to grow wealth for investors in these companies.

So it's horses for courses IMO. One needs to consider each case on its merits and in the light of one's own circumstances and investment criteria.

[PhaedrusFollower]

Thank you all for your input on Dividend Reinvestment. I note Freightways have just stopped their plan. Are they too cash rich? Personally, I like getting dividend payments...only on a purely emotional view of money semi randomally popping up into my bank account. But from an investment point of view, and in the case of AIA, I think the reinvestment option looks good. I guess the real numbers are: If the purchase price at Dividend time is 2.5% or greater than the SP post dividend, plus say 1% brokerage, you win...although in my case, I only hold 10,000 AIA so the number of shares vs brokerage is disproportionate. I guess Telecom who pay 10% dividend annually, would be an example (with a dropping share price) of where you would take the cash. Interesting.

[peat]

Seems like it is not the overall impression that Auckland Airport is a horrible experience.

http://www.nzherald.co.nz/travel/new...ectid=10634068

Auckland International Airport Ltd has been voted ninth-best airport worldwide and the best airport in the Australia-Pacific region by travellers in the 2010 Skytrax World Airport awards...

The awards are based on a survey of airport customers that was carried out between July 2009 and March 2010.

[ratkin]

Good result it seems

Company had improved its level of
profitability and was increasing its interim dividend to 4 cents per share to
reflect the level of confidence the Board held that the strategy was
delivering a step-change in performance.

Charlies used the expression step change in their result yesterday , must be the new buzzword

[macduffy]

Did I miss it or did AIA not actually release an NPAT number in today's interim result?

There's reference to EBITDAFI being up 9.2% to $151m but I couldn't see an NPAT result.

EBITDAFI !!!!!!!!

[winner69]

Seems so ratkin .... just growing isn't good enough ... you need to make 'step change' in performance .... a 'step change' in market share .... and investing in markes where there is a 'step change' in demamd is a good strategy etc etc

Mean't to suggest you doing different things ... that will result in a 'step change'

Go to Google News -- over 300 items for recent 'step change' stuff in the world

Another phrase gaining prominence is 'hop,step and jump' when companies talk about new products and innovation ... 'hop' ones are just a little better than what they have now - step ones are better than that cause they are different in some way but the holy grail are 'jump' ones .... real innovation producing something that will change the market etc and kill the competitors .... and then those companies go on and set themselves targets like we mudt have 2 new 'jump' products every year ... and that 20% of our sa;es must come from 'jump' products developed in the last 3 years ...... else we won't get 'step change' growth

Get the picture .... isn't it all a load of old bollocks .... amazing how everybodies strategy is so similar eh ... not really differentiated are they ... but gives management the warm fuzzies ... and investors think they doing a good job

[winner69]

Did I miss it or did AIA not actually release an NPAT number in today's interim result?

There's reference to EBITDAFI being up 9.2% to $151m but I couldn't see an NPAT result.

EBITDAFI !!!!!!!!

Yep not in the news release although the full year is to be above $112m to $118m

Half Year was actually $65.5m (LY $54m)

[macduffy]

Yep not in the news release although the full year is to be above $112m to $118m

Half Year was actually $65.5m (LY $54m)

Thanks, winner.

Where do I find the Half year NPAT $65.5m ?

The news release doesn't include it and the links from the AIA website which purport to carry the full story don't work.