Wednesday, September 27, 2017

STAR: A Costly Dividend

Star went ex today for first interim and special dividends totaling 36 sen. Yesterday, it dropped 6 sen ahead of the dividend ex date. It closed at RM2.30. After deducting the 36-sen dividend, Star's reference price is RM1.94. Amazingly Star is now trading at RM1.80 as at 3.20pm. This means that a shareholder who held the stock for the dividend received 36-sen dividend but is down 50 sen.    

It is worth highlighting that the selldown is overdone notwithstanding the competitive nature of the media business, etc. Chartwise, we can see that the share price is trading just below its long-term uptrend line (in blue) at RM1.85 as well as the line connecting the last 2 years' troughs (in orange) at RM1.80. I won't be surprised that the stock may see a 10-15 sen rebound over the next few days.

Assuming Star continues with its twice yearly dividend of 9 sen each (or, 18 sen in total), its dividend yield is now a whopping 10%.


Chart 1: Star's weekly chart as at Sep 27, 2017_3.20pm (Source: Malaysiastock.biz)


Chart 2: Star'smonthly chart as at Sep 27, 2017_3.20pm (Source: Malaysiastock.biz)

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