For me its NICA.

Awni arko prasna I see a lot of people comparing stock based on dividend capability like this, Let’s say a company A share price is 250 and company B share price is 1000. If company A decided to give 15% dividend and company B decided to give 30%. I hear some people and big investor like Dipendra Agrawal ( I don’t follow/like this guy by the way ) say company A is cheaper and give 15% dividend then on same price of 1000, I could get 60% then why would I go for company B?

My mind couldn’t process how that statement is right, A percentage is a percentage no matter how many shares you have on same price. If the share price of both company reaches their previous price of 250 and 1000 after bonus then on same price of 1000 overall it would be bonus of 15% and 30% not 60% and 30%.

I am not a finance or management student so sorry in advance if I am wrong but isn’t it better to get get dividend of company that has better valuation, has been consistent for longer period of time and has better future prospects.

More at: r/NepalStock by Dryhumor00

9 comments
  1. Yes i agree NICA’s business growth is like rapid and aggressive, soon will out perform all in the banking index. SANIMA is undervalued too, for long term.

  2. You are the owner of company if the overall business of company is growing you wealth is maximized by the growth. The real return is the increase in size of company dividend is the least you should care about. If czbil machapuchre cant increase deposits and loans figure it will not hit profitability of company and eventually share price will decrease.

    If Nica manages to keep its growth above 20% you will easily compound your money regardless of it giving dividend or not. For the same reason if you see the last 5 yrs return nica has outperformed all bank although its not a clear favorite when it comes to bonus share.Stop running after dividends focus on growth of company return will run after you.(3 idiot reference hahaha)

  3. It is incredibly stupid to value companies based upon their bonus shares. A company going into loss could give you bonus shares of 200% . That doesn’t make the company more valueable than another company making healthy profits, reinvesting into the company itself but giving you only 1% bonus shares. Regarding cash dividends , one would have to look at a long term future ability to maintain consistency. Otherwise a bad company could give 100% cash div emptying its reserves and about to declare bankruptcy , while a good company might just give 20% cash div but healthy growth. Regardless of their prices(1000 or 250), the good company is still more valuable . In case of consistent cash dividend in long term future, Rs 1000 company is more valueable(cheaper) than Rs 250 company. But many in here seem to think otherwise. (Since they correctly assume its calculated on face value, but do not look any further)

  4. Bro le sodna khojekai bujina. Whats ur preference A or B ?
    suppose company A and B have 1 lakh outstanding shares. Company A decides to give 10% bonus div and 5% cash div totaling 15%. Company B decides to to give 20% bonus div and 10% cash div totaling 30%.
    Assume price on book closure is 250 and 1000 respectively.

    Now Hari decides to invest 1 lakhs each in both companies before book closure.

    Company A case
    Total shares before closures = 400
    Total shares after closures = 440
    Cash dividend = 400 X 5 = Rs. 2000
    New Share price after adjustment = Rs.228
    Total value = 228 X 440 + 2000 = Rs. 102,320
    Total gain = Rs. 102,320 – Rs. 100,000 = Rs. 2,320.

    Company B case
    Total shares before closures = 100
    Total shares after closures = 120
    Cash dividend = 100 X 10 = Rs. 1000
    New Share price after adjustment = Rs. 833
    Total value = 833 X 120 + 1000 = Rs. 100,960
    Total gain = Rs. 100,960 – Rs. 100,000 = Rs. 960

    A is clearly winner here if the price movement of the both company remains parallel or stable.

  5. Alot of people who are running this market have very little knowledge on these matter they just have a huge fund and money still has advantage over technical knowledge.

    But that’s gonna change soon.

  6. Yeah, cash dividend is based on par value i.e. shares A and B will yield 15rs per share and 30rs per share respectively. That would be a return of 3% in share B and 6% in share A. So, share A wins!

    As for bonus shares, there’s a thing called price adjustment. What that means, in practice, is that even when numbers of shares will increase due to additional shares, market price of that stock will remain the same! In that sense, bonus share is just a dilution of share ownership – nothing to do with value or market price of the stock!

    Nepse investors have a collective understanding/unwritten agreement that bonus shares are better, and because of that, the bigger the bonus shares, the more likely the price of that stock will go up. After all, it’s the market (buyers & sellers) that determines the prices of the shares.

    And, unfortunately, people are so much into bonus shares thing that a large number of people don’t even care about the financial health of the company of which stocks they are buying.

  7. You are right for bonus shares…but for cash dividends its true since cash dividends are based on face value i.e 100..so company A will be better

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