Thread by @WoleOluyemiCo

Someone asked me what could a company objectives be other than to declare profit and share dividends?

I laughed. Making money is different from declaring profit and sharing dividends.

Let me try to explain. #thread.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 1/16

https://twitter.com/WoleOluyemiCo/status/1256339174988238848

It is the lack of understanding of this point that made several people to invest in some SPV companies that might never declare a profit.

The selected few are aware that such entities are not structured to declare profit.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 2/16

Yes, there are some companies that didn’t share a single Kobo as dividend for close to 20 years.

You have probably invested in some of them on the Nigerian Stock Exchange 🤣🤣🤣.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 3/16

Don’t come and ask me for names. I won’t tell you anything. If you ask me, na who I go ask? 🕺🏽🕺🏽🕺🏽😁😁😁🤷🏽‍♂️

Don’t come into my DM to ask me for how they did it....unless you are ready to pay my fees 😁.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 4/16

See....let me just tell you now!

Depending on the side of the table you are on, dividend is not necessarily the only way to recoup your investments in a company.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 5/16

I know this contradicts what you learnt from your parents and/or the entrepreneurship course you attended 🤣🤣🤣

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 6/16

Thanks to the duo of Modigliani and Miller, and Myers for the great work on capital structure, dividend irrelevancy and capital structure substitution theories.

Search for the above and read them well...you might need them.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 7/16

Yes, capital structure is one of my favorite areas in corporate finance.

Let’s go back to the topic. Apologies for the distraction.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 8/16

So, for those on the right side of the table, dividend payout (dividend per share) might not necessarily be a perfect measure of business performance to such a shareholder.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 9/16

Dividend Payout per share (DPS) is just a vanity metric for showmanship in the media. It’s only useful for the “Dugbe” (minority) shareholders 😭😭😭.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 10/16

For many of us, this is where we belong. “We” make so much noise during the AGM but zero impact on the final decisions that are taken 🙄🙄🙄.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 11/16

Let me tell you why. The “real” shareholders met at IKOYI Club or Polo a Club during the preceding week to the AGM to finalize the discussions which they started at Chief Jeunkoku’s first wife’s birthday party.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 12/16

If you are a valuable💰shareholder in a company that is really “making it”, you should/would be more interested in your EPS (adjusted for special items), ROI, ROE, ROCE using what we call “Total Shareholder Returns” (TSR).

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 13/16

In conclusion:

Dividends might just be a minute part of your TSR.

Be strategically positioned.

Be strategic. Begin with end-game in mind.

Focus on value growth and extraction.

Be conscious of the risks.

Plan ahead.

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 14/16

The purpose of a thread like this is for intellectual debate and learning. Please feel free to disagree (or agree) with any viewpoint (including mine) raised in this thread. However, kindly refrain from using any abusive language on anyone on my post.

#Returns #WO 15/16

I know that my style of writing is targeted at people with a certain level of understanding of the topic being discussed and this may be beyond a few people. If you don’t understand, I apologize.

Thank you 🙏🏽

#Investing #DPS #ROI #ROE #ROCE #TSR #Returns #WO 16/16