CG holding Nikko Cordial, the Japanese investment banking and brokerage house, has announced a changes in its dividend policy that will pass greater benefits to us shareholders.
As reported previously on this site, takeover activity is picking up in Japan. Many companies are increasing dividend payouts as a means of protecting themselves from shareholder activists and hostile takeovers.
Nikko Cordial will set aside 50% of its consolidated net profit for dividend payments, effective in fiscal 2005 to next March 31. The current payout ratio is 35% of net profit.
Plus, the company will pay at least 8 yen per share in principle, regardless of earnings, after conducting a 2-for-1 reverse stock split and halving the minimum unit of trading to 500 shares on September 1. For those who may not know, most companies trading on Japanese exchanges trade in minimum lots of 2,000 shares. This should make Nikko Cordial's shares much more liquid in its native country.
Beginning in fiscal 2006, the company will pay a quarterly dividends when Japanese law, scheduled to take effect next spring, will remove restrictions on the frequency of dividend payments companies are allowed to make.
This is a win/win for Nikko Cordial shareholders. Any company attempting a takeover of Nikko Cordial will have to pay up in order to win any shareholder vote. In the meantime, we shareholders enjoy greater cash payouts while waiting to see what happens.
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