No Dividends

blackbearbosin

First Time Share Buyer.

I was thinking that, while they were low, I would pick up some Mitchells & Butlers shares.

I see from their results, published today, that it appears that they wont pay any dividends until the end of 2010! If this is the case (unless I'm reading it wrong) then why buy shares in M&B. Is to wait for better times ahead? I would have thought this is one company, considering their spread of food/drinks interests, that would not go under.

Idiophreak

blackbearbosin wrote: »

First Time Share Buyer.

I was thinking that, while they were low, I would pick up some Mitchells & Butlers shares.

I see from their results, published today, that it appears that they wont pay any dividends until the end of 2010! If this is the case (unless I'm reading it wrong) then why buy shares in M&B. Is to wait for better times ahead? I would have thought this is one company, considering their spread of food/drinks interests, that would not go under.

This doesn't seem that hard to work out..

When the company's doing well, shares do well, they pay dividends.
When the company's having a hard time, the shares drop and they suspend the dividend.

You can't expect to buy low and still get a healthy dividend - the two things are completely juxtaposed.

purch

Theoretically if they don't pay a Dividend, then that money will be put back into the business, which should grow the business and therefore the value of the Stock.

Not paying a Dividend, or at least a reduced dividend is one of the cheapest ways a company can raise capital to grow the business.

You will need to investigate the case with M&B and come to your own decision as to whether they are trying to grow the company, or just not making enough money to pay a divi, or if there is another reason.

StevieJ

Idiophreak wrote: »

This doesn't seem that hard to work out..

When the company's doing well, shares do well, they pay dividends.
When the company's having a hard time, the shares drop and they suspend the dividend.

You can't expect to buy low and still get a healthy dividend - the two things are completely juxtaposed.

I think Shell disprove that theory, they were recently on offer at 12.35 with a dividend yield of 8%,in the past they have never cut their dividend, in fact they have just increased it by more than inflation.

Lokolo

Also sometimes companies that don't have massive share price changes but doing ok, they will give out dividends to keep investors happy (well this is what I learnt in Business A Level but from what others say it seems they don't!)

blackbearbosin

Thank you all for your advice.:beer: