Should be getting a presser some time soon - Annual Dividend

[Smazz]

Lets have some fun as this usually becomes a colourful topic ;D

 

Im going to guess not much higher than last year - meaning dont expect the same % jump as previous years.

 

 

 

Smazz

[KFRCanuk]

Lets have some fun as this usually becomes a colourful topic ;D

 

Im going to guess not much higher than last year - meaning dont expect the same % jump as previous years.

Smazz

 

These were the dates and amounts of the dividend payouts in past years

 

Jan 8, 2002 $1.00

Jan 9. 2003 $1.50

Jan 12, 2004 $1.40

Jan 12, 2005 $1.40

Jan 3, 2006 $1.40

Jan 23, 2007 $2.75

Jan 5, 2008 $5.00

Jan 16, 2009 $8.00

[JackW0]

I believe we will get at least $8, Fairfax never lover previous year dividend. Even during difficult times $US 1.4 was a positive move from $CDN 1.5

[gaf63]

Guessing that it will be a min. of $10, possibly slightly higher 

[NormR]

Even during difficult times $US 1.4 was a positive move from $CDN 1.5

 

Ah, now that FFH is only on the TSX, will they move back to paying CDN dividends?

[tyska]

 

 

These were the dates and amounts of the dividend payouts in past years

 

Jan 8, 2002 $1.00

Jan 9. 2003 $1.50

Jan 12, 2004 $1.40

Jan 12, 2005 $1.40

Jan 3, 2006 $1.40

Jan 23, 2007 $2.75

Jan 5, 2008 $5.00

Jan 16, 2009 $8.00

 

The latest that they have announced it though is the 6th of Jan., so only two more days to not go later. When they first started they were announcing in Dec..

 

Dan

[StubbleJumper]

Even during difficult times $US 1.4 was a positive move from $CDN 1.5

 

Ah, now that FFH is only on the TSX, will they move back to paying CDN dividends?

 

Presumably they'll stay with $US because the majority of their operations (C&F, ORH, US run-off) conduct their business in $US, which they then dividend upwards to FFH.  The advantage of FFH not converting the $US into a $CDN dividend is that a dividend in $US can be stable in nominal terms, but it could end up jumping around a fair bit after conversion to $CDN.  Normally investors prefer the appearance of stable, increasing divvies rather than seemingly random, volatile amounts....

 

Personally, I don't really care which currency it's in, but I would like to have enough time before the stock goes X-D to "move" my shares from my US account to my CDN account so that my brokerage doesn't automatically ding me on the currency translation for the dividends.

 

SJ

[Parsad]

I think they'll almost double the dividend this year...probably $13-15/share and about a 3.25-3.5% yield.  They've got some pretty regular income now from their muni portfolio and dividend paying stocks.  They've got ample cash, everything is in-house and now 100%-owned, and they've got no run-off expenses going forward.  They'll also probably dividend up excess surplus from ORH on an annual basis, and they're listing costs for Northbridge and Odyssey have been eliminated.  I'm guessing G&A going forward will be a little less also, since they have lower legal costs from the SEC business being resolved.  Cheers!

[EdWatchesBoxing]

I think they'll almost double the dividend this year...probably $13-15/share and about a 3.25-3.5% yield.  They've got some pretty regular income now from their muni portfolio and dividend paying stocks.  They've got ample cash, everything is in-house and now 100%-owned, and they've got no run-off expenses going forward.  They'll also probably dividend up excess surplus from ORH on an annual basis, and they're listing costs for Northbridge and Odyssey have been eliminated.  I'm guessing G&A going forward will be a little less also, since they have lower legal costs from the SEC business being resolved.  Cheers!

 

Would be interesting to see this happen.

[Smazz]

I Hope the $15 dividend does not come true. Even though I hold the stock, do the math and thats a good chunk of change which would be better utilized at the Hold Co level IMO.

[NormR]

I Hope the $15 dividend does not come true.

 

I second that but via a different direction.  It seems better to hold back a bit so that future annual dividend increases can be assured.  That way FFH can put itself on screens/indexes used by dividend growth investors. 

 

[Parsad]

I think one of the things that we forget about the dividend is that it is a form of compensation for many of the managers, including Prem.  As most have fixed salaries, with limited bonuses and no options or stock grants, the dividend is their primary form of compensation for a job well done.  While it isn't very tax-efficient, it's a much better alternative to the managers selling any stock they own.  As well, for many managers, Fairfax is their largest asset outside of their home, and the dividend over time allows them to diversify a bit as the stock price continues to go up.  Cheers! 

[Uccmal]

They should make it quarterly.  Save the money from the year end and eke it out quarterly.  This will help get the stock off its annualized merry go round. 

[beerbaron]

Was it Fisher that stated that dividends or no dividends did no difference on the total return of a stock?

 

Either way, they can keep their dividends and invest it for me, with the investing opportunities drying up I realize that I love the managers that can manage a portfolio for me!

 

BeerBaron

[shalab]

Giving out dividends is a good idea for people holding BRK, FFH paying out dividends is a good mix in the portfolio.

 

 

[NormR]

Was it Fisher that stated that dividends or no dividends did no difference on the total return of a stock?

 

Well, that might be good in theory but in practice dividend paying stocks tend to outperform non-dividend paying stocks.   

[ECCO]

My guess is a 2.50$ or 3.00$ quarterly dividend.

 

 

ECCO

[Uccmal]

My guess is a 2.50$ or 3.00$ quarterly dividend.

 

 

ECCO

 

That seems a reasonable line of thinking. 

[Smazz]

I think one of the things that we forget about the dividend is that it is a form of compensation for many of the managers, including Prem.  As most have fixed salaries, with limited bonuses and no options or stock grants, the dividend is their primary form of compensation for a job well done.  While it isn't very tax-efficient, it's a much better alternative to the managers selling any stock they own.  As well, for many managers, Fairfax is their largest asset outside of their home, and the dividend over time allows them to diversify a bit as the stock price continues to go up.  Cheers!  

I havent forgotten, just reminds me of the saying "all men were created equal, but some are more equal than others"

[ERICOPOLY]

Dividends are not compensation.  Stock grants are compensation, salary is compensation, bonuses are compensation.  But dividends, that's not compensation... it's just their rightful slice of what they already own.

 

Let's compensate them... pay them more.  These guys are underpaid and if cash flow is what they need, then let's pay them appropriately. 

 

As for the dividend, I like the dividend and I hope they raise it to the moon -- it will increase the ROE of what gets left behind. 

[oec2000]

Was it Fisher that stated that dividends or no dividends did no difference on the total return of a stock?

 

Well, that might be good in theory but in practice dividend paying stocks tend to outperform non-dividend paying stocks.    

 

Not sure whether there is a specific study you are referring to but wouldn't there an inherent negative bias in the "non-dividend paying stocks" sample (because most non-dividend paying stocks are unprofitable or have financial issues) that would make any study misleading?

 

To me, it boils down to the return that retained funds can earn. Shareholders of a company that can generate a high marginal ROI would, imo, be better off if no dividends were paid out because earnings would compound at a much higher rate than otherwise and in the long run, stocks tend to be valued off earnings.

 

As a long term investor in FFH, I would much rather see them keep their dividend payout low and use the surplus funds opportunistically in share buybacks, buyouts or acquisitions especially in cash-constrained times like these. I would have preferred them not to have paid any dividends in 2009, for e.g., and then issue fewer dilutive shares for the ORH buyout. Unfortunately, this is not the way markets or shareholders like it even though it makes perfect rational sense.

 

To be Machiavellian about it, the best thing to happen for long term shareholders would be for FFH not to declare dividends for 2010, let the share price fall in response and use the surplus funds to buy back stock cheap. Of course, this is not going to happen because it is not the "friendly" FFH way of doing things. I'm just saying that long term shareholders should rejoice, not whine, if dividends are kept low.

 

 

[ERICOPOLY]

Not sure whether there is a specific study you are referring to but wouldn't there an inherent negative bias in the "non-dividend paying stocks" sample (because most non-dividend paying stocks are unprofitable or have financial issues) that would make any study misleading?

 

That's right, obvious as it would otherwise seem.  (it would be obvious to most Martians at least).

 

 

 

 

[Smazz]

Looks like some of us were bang on

$10 US /Share  Payable Jan 26

 

http://www.fairfax.ca/Assets/Downloads/Press/fpr2010-01-05.pdf

[gaf63]

$10 and they kept the payout in US$

[NormR]

Was it Fisher that stated that dividends or no dividends did no difference on the total return of a stock?

 

Well, that might be good in theory but in practice dividend paying stocks tend to outperform non-dividend paying stocks.    

 

Not sure whether there is a specific study you are referring to but wouldn't there an inherent negative bias in the "non-dividend paying stocks" sample (because most non-dividend paying stocks are unprofitable or have financial issues) that would make any study misleading?

 

Err, um, thanks for providing a reason why.  :)

 

But you seem to interested in a more complicated question.  Namely, do profitable dividend paying stocks outperform profitable non-dividend paying stocks.  I don't have a study to hand for this question but it seems likely the case.  (Empire building, etc)  Retained earnings often generate poor returns.  There are of course notable exceptions but that's why investors appreciate the BRKs&FFHs of the world.  :)