Day: April 9, 2024

At the outset of the new business year, publicly listed companies are preparing for their annual general meetings (AGMs), significant events where those demonstrating robust financial performance from the previous year may declare dividends.

This prompts the question: what type of dividends will a company distribute to its shareholders? A company has the option to distribute either stock dividends, cash dividends, or a combination of both. Stock dividends and cash dividends represent two distinct avenues through which companies allocate profits to their shareholders. Below, we provide a comparative analysis of these methods and their potential impact on prevailing stock prices.

Stock Dividends:

Stock dividends involve the issuance of additional shares of the company’s stock to existing shareholders, typically on a pro-rata basis. For example, a company might declare one additional share for every ten shares held by a shareholder.

Unlike cash dividends, stock dividends do not involve the distribution of ca
sh; instead, they signify a transfer of retained earnings into the company’s equity capital.

From the shareholders’ perspective, receiving stock dividends increases the number of shares they hold but does not alter the overall value of their investment.

For instance, if a shareholder owns 100 shares of a company’s stock valued at Ghs50 per share before a 10% stock dividend, they would receive 10 additional shares, yet the total value of their investment remains unchanged.

Stock dividends are often perceived as an indication of the company’s confidence in its future prospects, signaling reinvestment of profits into the business rather than cash distribution.

Cash Dividends:

Cash dividends involve disbursing a portion of the company’s profits to shareholders in the form of cash payments. The dividend amount is typically specified as a fixed sum per share (e.g., Ghs0.50 per share).

Cash dividends provide shareholders with immediate cash returns on their investment, which they may utilize for consumption, r
einvestment, or other financial endeavors.

Income-oriented investors, seeking regular income streams from their investments, typically favor cash dividends. Additionally, cash dividends may attract investors seeking stable returns and dividend yield.

Impact on Current Stock Prices:

The impact of stock dividends and cash dividends on current stock prices can fluctuate depending on various factors, including investor sentiment, market conditions, and the company’s financial performance.

Stock dividends, by increasing the total number of shares outstanding, dilute the ownership stake of existing shareholders. However, since stock dividends do not alter the overall company value, their impact on the stock price per share is often minimal. In some instances, the announcement of a stock dividend may result in a temporary decrease in the stock price due to perceived dilution by investors, although this effect is typically short-lived.

Conversely, cash dividends typically deplete the company’s retained earnings
and cash reserves. While cash dividends may be well-received by income-oriented investors, large or unexpected cash dividends could signal to the market a lack of profitable investment opportunities or financial challenges. Cash dividends affect current prices on the ex-date because share prices represent future cash flows of the company, meaning future dividend payments are incorporated into the share price.

For details, the use of discounted dividend models can help analyze a stock’s value in the market. Consequently, the impact on the stock price per share may vary, with some investors interpreting cash dividends positively and others viewing them as a negative indicator of the company’s future prospects.

Overall, while both stock dividends and cash dividends can influence shareholder wealth and investor sentiment, their impact on current stock prices hinges on various factors and may differ from one scenario to another.

For a deeper understanding of this subject and further assistance kindly contact Ec
oCapital Investment Management Ltd., on +233(0)501 553 502 or send us a mail via invest@ecocapinvestment.com.

EcoCapital Investment Management Limited (EIML) is a company incorporated in Ghana and licensed by the Securities and Exchange Commission (SEC) as an Investment Management firm, and by the National Pensions Regulatory Authority (NPRA) as Fund Manager of both second and third tiers of the national pension scheme.

The corporate mandate of the firm is to deliver premium financial solutions and investment management services to both retail and institutional investors in Ghana. Services on offer at EcoCapital include: Wealth Creation and Management, Investment Portfolio Management, Pension Fund Management, Mutual Funds, Retirement Planning, Investment research and Advisory. The firm has three mutual fund products under management, namely; Prime Fund, Nordea Income Growth Fund and the Weston Oil and Gas fund.

Written By:

Dela Herman Agbo, MBA, MSc, CGIA

Chief Executive Officer

EcoCapital Investment Ma
nagement Ltd.

Source: Ghana Web

Mr Jonathan Amoako-Baah, a former Chief Executive Officer of the Ghana Grid Company Limited (GRIDCo), says investment in renewable energy, including solar is not a viable option to drive Ghana’s industrialisation agenda.

He said in the wake of the intermittent power challenges, the country should focus on establishing a ‘very big’ base load such as a nuclear power plant that would offer reliable and affordable power to champion massive industrialisation for development.

Mr Amoako-Baah, a former Board Member of the Nuclear Power Institute (NPI) under the Ghana Atomic Energy Commission (GAEC), made the call when some Staff members and Management of the Nuclear Power Ghana (NPG) paid a courtesy call on him at his residence in Koforidua in the Eastern Region.

The visit was heralded by a tour of the Boti Falls in the Eastern Region as part of NPG’s activities to commemorate the Ghana Heritage Month.

Mr Amoako-Baah said the country required ‘conventional plants’ as baseload to guarantee a reliable supply of pow
er for industries.

He said in the wake of the depletion of the country’s hydro resources, nuclear power remained the viable option to power Ghana’s industrialisation plan in the long term.

‘Renewables cannot power the industries; Tema Steel or VALCO is a case in point. VALCO takes about 345MWe. How much renewable can you put to generate such power considering the intermittent nature of renewable and capacity factors? In the night and during some seasons, you do not have the sun to power the solar panels. The wind is also not consistent.

‘You need a very big baseload plant; conventional plants like hydro (which has been used up); thermal or nuclear. Nuclear is the new thing now,’ he said.

Mr Amoako-Baah called for the active continuation of Ghana’s Nuclear Power Programme to enable the country to achieve the target of building and operating the first nuclear power plant in the near future.

‘The work must continue for us to be able to establish the first nuclear power plant by 2030. Government should pay a
ttention to this,’ he said.

Energy experts estimate that beyond 2025, Akosombo and Kpong Hydropower Plants, the nation’s baseload supply points which currently serve 32 per cent of electricity demand, would have reduced drastically to about 25 per cent.

Ghana in its quest to access affordable and stable power to industrialise sustainably as well as to meet the global energy transition from fossil fuel to clean energy, is seeking to include nuclear power in its energy mix.

The deployment of nuclear power in Ghana is also in line with the country’s medium-term development plans and climate commitments under the Paris Agreement.

The decision is also part of the country’s Green Energy Solutions targets and the government’s medium to long-term strategy of actualising industrialisation and socio-economic development within the West African sub-region.

Dr Stephen Yamoah, the Executive Director of NPG, said meetings and discussions with vendors for Ghana’s nuclear power plant would continue this year.

He said t
he NPG under the policy direction of the Ministry of Energy had targeted taking ‘firm decisions’ on the technology, the financing arrangements, and the project structure this year.

‘We have really advanced and the target this year is to be able to come out with a decision on the vendor and the technology… I am certain,’ Dr Yamoah said.

Source: Ghana News Agency

Bishop Adonteng Boateng, a Ghanaian-American theologian based in the United States of America, rescued a young child from the wreckage of a flipped truck that caught fire.

The preacher, who also serves as a philanthropist and is the head pastor of Divine Word International, brought joy to the mother of the child.

Both the child and his mother were rushed to the hospital after sustaining injuries of varying degrees.

Bishop Adonteng Boateng was captured in videos at the scene with the young child.

Source: Ghana Web

Benso Oduro Boateng aka Funny Face, a comedian, who allegedly knocked down a woman and two children at Kakraba Junction on the Kasoa-Nyanyano road has been granted bail.

Appearing before a District Court Kasoa Akweley, Funny Face was admitted to bail in the sum of GHC 120,000 with two sureties.

Boateng is facing charges of careless and inconsiderate driving and two counts of negligently causing harm.

Boateng’s plea has not been taken by the court presided over by Annie Adobor. This is because investigations are ongoing.

Meanwhile the GNA has learnt that four of the victims have been discharged but the elderly woman is still on admission because of surgery performed on her legs.

The case presented by Assistance Superintendent of Police (ASP) Thomas Sarfo was that on March 24, 2024, at about 7:50 pm Benson Oduro Boateng, a driver and a resident of Millennium City, Kasoa, was driving a Hyundai Atos Private car with registration number GN 1134-16 from Kasoa towards Nyanyano.

On reaching a section of the roa
d at Kakraba Junction on the Kasoa Nyanyano road, Prosecution said Boateng knocked down a pedestrian by the name Theresah Quaicoe of about 50 years and her two children, Elizabeth Turkson, age about 5years and Robi Turkson, age about 1year, who attempted crossing the road.

According to the prosecution, in the process, Boateng lost control of the steering wheel and crashed head-on with a motor bike with the registration number M-18-GR 1976 ridden by Sam Francis Kwesi Bible with a pillion rider, Nicholas Ashong.

Prosecution said Theresa Quaicoe and Elizabeth Turkson, were referred to Korle-Bu hospital Accra, for further treatment whiles victim Nicholas Ashong was referred to the Ridge hospital, Accra for further treatment but could not be admitted due to shortage of bed and was brought back to Kasoa Community Clinic for further treatment.

Source: Ghana News Agency

In a touching display of humility and respect, Henry Quartey, the Minister of the Interior, was seen kneeling before the revered Chief Imam of Ghana to receive prayers.

The intimate moment, captured during an Iftar celebration in Accra on April 8, 2024, saw the Chief Imam, Sheikh Osman Nuhu Sharubutu, a figure of significant religious influence in Ghana, offering blessings to Henry Quartey.

As Henry Quartey knelt, the Chief Imam placed his hands on his head, offering words of wisdom and blessings.

Henry Quartey, who is also the MP for Ayawaso Central, joined other politicians, including Vice President Dr. Mahamudu Bawumia, and the leader of the Movement for Change, Alan Kyerematen, who have been spotted in intimate moments like this with the Chief Imam.

Henry Quartey shared food and drinks with the Muslims who gathered at the Alajo AstroTurf Park to celebrate the Iftar.

The Muslim community will mark this year’s Eid-ul-Fitr on Thursday, April 11, 2024.

Source: Ghana Web