Rishi's Dividend Ban

[moorfield]

[IRRELEVANT, text deleted, please don't second-guess Mods in advance, or tempt fate]
[RELOCATED, away from High Yield as it is of wider relevance]


I've seen this reported in a few places today.

https://www.editorials360.com/2020/09/2 ... porations/

Britain’s greatest companies have been instructed they can’t pay dividends, dish out bonuses or sack workers in the event that they need to profit from Rishi Sunak’s newest coronavirus bailout.

(*) that's an obscure 1960s tv reference for those paying attention at the back of class

Moderator Message:
dspp

[James]

I am not a number!

[Darka]

I think the ban is a good idea, any firm needing to take advantage of the new bailout isn't in the position to pay dividends and should not.

[monabri]

How does one check if a company is participating.?..

( just another thing to make UK shares less attractive to foreign investors....and UK investors).

Between Sunak and Woods, retirees will see their living incomes reduce.

[Dod101]

Most peculiar English in the link. Anyway, I think he is right and he should have done it with the furlough scheme and other handouts/assistance. It is unlikely that any of Britain's greatest companies will be participating anyway. (I have managed to count about three)

Dod

[monabri]

A translation from a foreign language?

"in the event that they need to profit from Rishi Sunak’s newest coronavirus bailout"

"However not like the prevailing lifeline, which was utilized by massive companies akin to British Airways and Philip Inexperienced’s Arcadia "

"With the furlough scheme because of shut on the finish of subsequent month, "

"Additional particulars will probably be printed within the coming days "

"The lack of dividends is one other blow within the brief time period however higher that than the long-term harm to an organization’s status"

"BA’s determination to furlough almost 23,000 workers shortly earlier than saying plans to chop 12,000 jobs angered MPs,"

Inglish graduat ?

[monabri]

I see the following text at the bottom of the article

"Should you click on on them we could earn a small fee. That helps us fund This Is Cash, and hold it free to make use of..."

It's Borat the author is!

https://g.co/kgs/1TkNeU

My sister, 2nd best .....

[Breelander]

I see the following text at the bottom of the article

"Should you click on on them we could earn a small fee. That helps us fund This Is Cash, and hold it free to make use of..."

Actually the article doesn't originate on the site linked to, editorials360 is the one getting the 'small fee'. It is an aggregation site and it copied that article from the Daily Mail's 'This is Money' site here:

https://www.thisismoney.co.uk/money/new ... anies.html

But there's no need to take the Daily Mail's word for it, go to the horse's mouth on GOV.UK

Job Support Scheme Factsheet
....Our expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.

https://assets.publishing.service.gov.u ... tsheet.pdf

[Arborbridge]

But there's no need to take the Daily Mail's word for it, go to the horse's mouth on GOV.UK

Job Support Scheme Factsheet
....Our expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.

https://assets.publishing.service.gov.u ... tsheet.pdf

An interesting situation: so companies have become part of social engineering. They have to choose between give succour to the young or the old, but not try to do both. I guess from the political POV (and probably the economic one too) he would prefer the former but wants the companies to make the decision so he can wash his hands of it.

Preserve the nation's job for the young and the old can survive on food banks or die of covid thus re-invigorating the population. This social engineering is more a socialist or totalitarian approach than a Tory one.

Arb.

[dealtn]

So, has anybody got any Share Ideas, or explain what this thread is doing here?

Moderator Message:
See viewtopic.php?p=342960#p342960

[Dod101]

Preserve the nation's job for the young and the old can survive on food banks or die of covid thus re-invigorating the population. This social engineering is more a socialist or totalitarian approach than a Tory one.

I think that is simply not true. If a company needs government help, by definition it cannot afford dividends. That is just common sense. I agree that I do not welcome a suspension of dividends but that is just too bad I am afraid.

Dod

[Arborbridge]

Preserve the nation's job for the young and the old can survive on food banks or die of covid thus re-invigorating the population. This social engineering is more a socialist or totalitarian approach than a Tory one.

I think that is simply not true. If a company needs government help, by definition it cannot afford dividends. That is just common sense. I agree that I do not welcome a suspension of dividends but that is just too bad I am afraid.

Dod

Well, I wasn't expecting you to agree

[Wizard]

But there's no need to take the Daily Mail's word for it, go to the horse's mouth on GOV.UK

Job Support Scheme Factsheet
....Our expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.

https://assets.publishing.service.gov.u ... tsheet.pdf

An interesting situation: so companies have become part of social engineering. They have to choose between give succour to the young or the old, but not try to do both. I guess from the political POV (and probably the economic one too) he would prefer the former but wants the companies to make the decision so he can wash his hands of it.

Preserve the nation's job for the young and the old can survive on food banks or die of covid thus re-invigorating the population. This social engineering is more a socialist or totalitarian approach than a Tory one.

Arb.

My bold.

Given the vast amount spent and the measures taken it is pretty clear the young have been thrown under the Covid19 bus in order to give many older people a few more months or a couple of years at best.

[richfool]

That further reinforces the prudence of investing in overseas stocks.

[dspp]

So, has anybody got any Share Ideas, or explain what this thread is doing here?

I couldn't think of a better place, it certainly is not a High Yield matter. I was rather hoping that folk would chip in with some particular ideas in response to the OP.

One from me is to seek shares that aren't really dividend payers. That would tend to indicate non-UK fast-growing companies, most likely USA. But they don't suffer from the Conservatives' dividend ban and I cannot think of any UK companies that might fit that description.

So .... how about a UK recovery stock. I guess you could take the view that UK-specific banks such as Lloyds (who are affected by the divi-ban) are recovery stocks.

Alternatively .... grocers with a strong online/delivery presence. Tesco anyone ?

regards, dspp

[Dod101]

Well whether it is caused by the dividend ban or not I am quite surprised at the drop in share prices this last week. I do not see a pattern except possibly ITs investing overseas seem to have got off more lightly than domestic shares where there have been some really big drops, especially in the financials such as Legal & General, Phoenix Holdings and Chesnara. None of these should be affected by the dividend ban though.

Taking up dspp's point, I saw Lloyds was tipped somewhere recently and Aviva is tipped by the IC this week. Back to financial shares though. Aviva might just be useful as a relatively short term punt because the new CEO seems to have a good idea of what she wants and is taking action. Longer term though it still has the same problems as always with its baggage.
Dod

[dealtn]

Alternatively .... grocers with a strong online/delivery presence. Tesco anyone ?

Grocers wouldn't interest me at all.

Even if I were invested, in a low margin industry I would rather they took any government "hand-out" to assist the profitability, and not pay a dividend.

[Wizard]

That further reinforces the prudence of investing in overseas stocks.

That raises an interesting point. If a foreign company listed outside the UK is a large employer here, presumably it can use the UK Govt. scheme, is the treasury then looking to control that comapny in terms of dividends paid by the listed entity or would it only worry about the UK subsidiary repatriating profits to the overseas parent?

[Wizard]

So, has anybody got any Share Ideas, or explain what this thread is doing here?

I couldn't think of a better place, it certainly is not a High Yield matter. I was rather hoping that folk would chip in with some particular ideas in response to the OP.

One from me is to seek shares that aren't really dividend payers. That would tend to indicate non-UK fast-growing companies, most likely USA. But they don't suffer from the Conservatives' dividend ban and I cannot think of any UK companies that might fit that description.

So .... how about a UK recovery stock. I guess you could take the view that UK-specific banks such as Lloyds (who are affected by the divi-ban) are recovery stocks.

Alternatively .... grocers with a strong online/delivery presence. Tesco anyone ?

regards, dspp

Does the ban only apply to the new job support scheme? If so I can't see why Tesco would be using it, they are hiring not firing, so this would not affect them. I can't see how this news would lead one to land upon Tesco as a potential purchase. But as said elsewhere this news is IMHO more likely to lead to an idea to short or sell a share rather than buy one and I do not know if that is on topic for this board.

[SalvorHardin]

So, has anybody got any Share Ideas, or explain what this thread is doing here?

My latest ideas, into which I've put a fair bit of money are:

1) Japanese Smaller Companies (use funds, not individual companies). A few days ago I posted on about this on the Coronavirus (macro investment aspects) thread (link below). The argument is that Japan is way behind the rest of the developed world in online commerce, but companies and politicians have realised that this needs to change. The major innovations are coming from smaller companies; the larger companies are hampered by their existing bureaucracies which are highly resistant to change (e.g. fax machines and cassette tapes are still in widespread use in Japan).

https://www.lemonfool.co.uk/viewtopic.php?f=76&t=21665&p=342218#p342218

The JPMorgan Smaller Companies AGM presentation is on its website (under documents), but I still can't find the video where the lead manager talks about it.

2) Consolidation of the online streaming business, with the smaller players eventually being bought at a substantial premium by those looking to acquire more content to compete. This is much more speculative IMHO than my Japanese Smaller Companies idea, due to the nature of the business (and the targets).

Lions Gate Entertainment is my big punt in this sector, with a much smaller position in ViacomCBS. Below is a thread where I've gone into some detail regarding Lionsgate. ViacomCBS is controlled by the Redstone family who own a majority of the votes thanks to the two tier share structure. PE is just over 7 and it yields 3.25% before withholding tax.

https://www.lemonfool.co.uk/viewtopic.php?f=33&t=20059

3) Invest more overseas. Much of my investment success comes from having invested overseas very early on in my investment career (in the 1980s), so I don't have the home market bias that many investors acquire (particularly the HYP-P crowd who avoid "foreign" by reflex).

To me the increasingly anti-business attitude of much of the British population, media and political establishment, is a big deterrent to investing in the UK. So is the erosion of the rule of law, in particular landlords' property rights and law making by decree which was supposed to have been abolished in the 16th and 17th centuries but now seems to be the main way in which laws are made. The way in which the police nowadays openly take sides when dealing with protesters is a big turnoff as an investor; this is something that I'd expect to see in a banana republic but not a liberal democracy.

I'd be a lot less interested in investing in a foreign country with law making by diktat and an increasingly politicised police force, so why should I treat Britain any differently?