"Do not take yearly results too seriously. Instead, focus on four- or five-year averages."
Warren Buffett
A Place for Learning and Practicing "Value Investing" Taught by Benjamin Graham and Successfully Executed by Warren Buffett.
Friday, March 24, 2017
Hindustan Zinc Dividend Yield Translates to 18.43%
On 22 March 2017, Hindustan Zinc Ltd. declared a special interim dividend of Rs.27.5/share which
on a face/ nominal value of the share of Rs.2 translates into a 1375%. This
translates into a stellar dividend yield of 16.43%, tax-free!
Our ‘Portfolio 2K15’ holds as on day (25th
March 2017) 136 equity shares at an average holding cost of Rs.167.39 (current
market price Rs.323.25). Therefore a dividend per share of Rs.27.50 translates
into a dividend yield of 16.43% - the icing on the cake is that this dividend
is entirely tax-free.
Let us look at the situation from a slightly
different angle. The dividend per share of Rs.27.50 on an average holding cost
of Rs.167.39 means that the cost of our investment has already been recovered
to the extent of Rs.27.50 leaving the average cost holding at Rs.139.89 (167.39
– 27.50), which will further boost the future dividend yields, both regular and
special.
Please note that for Hindustan Zinc, being a
wonderful company it is, declaring such special dividends is becoming a regular
habit. The company had declared a special dividend of 1200% or Rs.24 per share
just last year!
After deducting the dividends earned from
Hindustan Zinc after this Portfolio 2K15 has been created, the dividend yield
after adjusting all the dividends so far amounts to a whopping 18.43%,
tax-free.
Assuming that Hindustan Zinc will declare another
special dividend next year to the same extent, our dividend yield after reducing
all dividends from investment will be 22.60%! Please see the picture below.
