Another way to look at it:
Paying Dividend is another way of bumping up the RoE nos with a few bps. So, the payout made from the Reserves decreases the Overall Book Value/Networth of the company which in turn increases the RoE %.
This logic makes sense for a company clocking decent growth (though less than its potential) but still managing to stick around a 17-18% RoE numbers. Cause when a company grows at 25-30% and they fail to show the similar kind of growth in subsequent years, its RoE decreases.
So, paying dividend is an easy way to keep the Networth under check and maintain a consistent RoE.
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