Stock ‘0 dong’, how much profit to pay dividends?

PTG share of Phan Thiet Garment Export Joint Stock Company is one of the stocks with the lowest market price on the stock exchange, with 200 VND/share. The trading volume of this stock is almost frozen. Most recently, on 11/11/2021, only 100 units were traded, an increase from 100 VND/share to 200 VND/share.

In 2021, PTG’s revenue will reach more than VND 400 billion, equal to 92% of the whole year plan. However, due to the complicated situation of the Covid-19 epidemic, the company has adjusted the plan to reduce it to 70%. Thus, in 2021, PTG is still considered to exceed the set plan.

In terms of profit after tax, PTG reached 38 billion dong, down 11% compared to the previous year but exceeding 3% of the whole year profit plan.

In PTG’s published general meeting document, the most focused content is the distribution of profits in 2021. Specifically, according to the plan from 2021, dividend Phan Thiet garment export is expected to be divided at the rate of 20%, equivalent to 2,000 VND/share. Thus, with 5 million listed shares of PTG, the divided amount is 10 billion dong.

However, in the newly announced profit distribution report, PTG plans to continue to pay a second dividend in 2021 at the rate of 100%, equivalent to VND 50 billion. Thus, the dividend paid in 2021 of PTG will be 120%. Dividend yield/market price is 6,000%.

Before that, in 2018, PTG also paid a 2017 dividend of up to 120%, equivalent to 12,000 dong per share, even though the market price was only 1,500 dong/share, the dividend yield/market price reached 800 %.

Phan Thiet Garment Export Joint Stock Company, formerly known as Phan Thiet Garment Factory, a unit of Binh Thuan Garment Export Company, was established in January 1994. The company officially operated in the form of JSC from September 2002. Line of business: Producing ready-made clothes; Sewing at home; Renting office; Restaurants and food services.

On the stock market, there were many companies that paid dividends at a very high rate, but the market price at that time was very meager.

For example, MEINFA Joint Stock Company (MEF) has approved the 2019 dividend payment policy at the rate of 30% in cash, equivalent to one share will receive 3,000 VND. However, the stock price of MEF on the floor at that time was only 1,600 VND/share, thus, the profit per share reached 187%. Not only that, many years ago, MEF also continuously maintained high cash dividend payment, from 30-35%.

Another enterprise is Deo Nai Coal Joint Stock Company (TDN), on May 25, 2020, this business closed the list of shareholders receiving 2019 cash dividends, each share will receive 1,000 copper.

With a market price of 7,500 VND/share at that time, the profit margin per share was 13.3%. However, shareholders who are holding TDN shares at the end of 2019 will receive a much higher yield. The reason is that at the time of dividend, the market price of TDN has increased by 40%, while at the end of 2019 the price was only around 5,000 VND/share.

Next, Song Da Industry and Trade Joint Stock Company (STP) pays 2019 cash dividend of 800 VND/share, while the current market price is only 6,500 VND/share.

With the same ratio as STP, Everpia JSC’s EVE stock, after the company closed the right to pay a cash dividend of 900 VND/share, equivalent to a dividend yield of nearly 9%. Immediately, the market price skyrocketed from 7,000 VND/share to more than 10,000 VND/share.

In stock investment, if investors only focus on dividends, companies with low market prices but high dividend rates will be the number one choice. Criteria for selecting these companies include a dividend yield greater than the one-year bank rate, a P/E of less than 7 times and trading below book value. Based on that investment principle will create a “filter”, instead of having to search in hundreds of companies listed on the floor.

Ngoc Cuong