I guess there is belief that the market has not priced in a special dividend......yet
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Impossible yes but bearing in mind yesterday's price was the pre brexit price level I would hazard a guess that sentiment hasn't priced in a lot. We have yet to really see the traditional gain in value associated with an announcement such as the VAH sale as nothing happened at the time this was released.
That's a very small part of the overall picture in that some investors on a marginal tax rate below the company rate of 28% can extract an advantage. You might like to do some digging and research on "dividend stripping". If you dig far enough you'll find the answer. Google it and have a look at some of the case studies for starters. I prefer to buy stocks cum dividend or the very day they go ex. A short period of relative outperformance over the following few weeks is the norm. You can't set your watch by it but far more often than not there are relative gains to be made that exceed normal level's.
Share splits and relative outperformance thereafter is another interesting market phenomenon.
P.S. 100% agree with what Balance has said below too. Also the simple fact that people generally love a really good dividend feed.
That seems to be the feeling here in NZ: strong companies pay a strong dividend.
In many other places companies prefer to grow by investing the dividend in themselves, although I guess that would be more prevalent in growth sectors.
Would I prefer a 25c dividend or perhaps instead a new Dreamliner that would help to earn future profits for the airline?
Both of these approaches have their own advantages, obviously.
NZ is known as a high yield market. Companies which do not pay dividends do not get retail support generally and the institutions like to see retail presence in companies.
Some companies used to have DRP but discontinued them as they were getting over-capitalised.
I get that but Air NZ is already a pretty good dividend payer.
Mikey's reflection is similar to mine, this is a special dividend which would predominantly come from the sale of VAH, do I want the special divi that would reduce NTA or would I prefer them to reduce debt/invest it themselves? I'm not actually that sure. It isn't that big of a deal either way except I might feel good for a few days after receiving a big pay out, the flip side being my shares will be worth 20c? lower.