PCRD pleasantly surprised its shareholders on Friday by announcing an unusually large special dividend of 6.3 cts per share on top of a final dividend of 2.4 cts giving 8.7 cts in total. This follows last year’s payout of 2.2 cts per share, which was a nice reward in itself given that it was the first time since 2010 that the company had paid dividends.
We had argued in 2015 that should Richard Li opt not to privatise PCRD, the Company could possibly resume paying cash dividends to shareholders with the continuous stream of dividend income it receives by virtue of its holdings in PCCW and HKT. While it took three years before the company began to take affirmative action, the combined 10.9 cts paid/announced in the last two FYs should go nicely towards rewarding shareholders for their patience.
Going forward, we do not expect a repeat of this year’s generous payout. However, the ~S$110 million of cash it receives from PCCW and HKT annually should comfortably support dividends of around 3.5 to 4 cts a share per annum, giving it a nice sustainable potential yield of 9.1-10.4% based on the last closing price of 38.5 cts.