Freetrade's dividends

(R3) #1

For the next half a dozen years, if not more, Freetrade will very unlikely pay a dividend to shareholders and employ earnings to support expansion. I’m fine with that.

Hopefully the day will come when Freetrade will generate sufficient cash flows and retain sufficient earnings in order to either pay a dividend or invest in other projects that hopefully offer both protection of capital and satisfactory returns.

What are Freetrade’s thoughts on this?
Does Freetrade aims towards a steady dividend payment or would prefer to allocate and compound the retained earnings for it’s partners?

(Kenny Grant) #2

Companies typically grow for decades (and the share price grows with that), and then finally when they plateau they start to pay dividends as they are no longer a growth stock. This differs with the sector and company of course. I’d be surprised if freetrade pay out dividends within 10 or 20 years, so it’s probably not useful for them to have an opinion on it now. If following the normal trajectory, they may grow for 20 years or so, perhaps IPO in that time, then they might think about dividends in a few decades if they are as big as Hargreaves Lansdowne say (founded in 1981, listed 2007, started dividends in 2008).

Personally I’d prefer they invest any profits in growth for at least the first decade a la Amazon.

(Dave Smith) #3

Some growing companies pay a very small dividend, for example NVidia pays a small dividend, but it’s hardly worth bothering with compared to the share price.

Companies that pay a decent dividend are usually established companies without much room to grow such as Utility companies or big Oil companies

(R3) #4

I’m fine with such a scenario. As for today I have no intention of selling my stock.
I like companies who pay dividends and I also like companies who use retained earnings to finance growth instead of paying a dividend. My preference goes to the one that makes more sense for each individual case at a given time.

eBay states they don’t pay a dividend and never will. I don’t like that. I don’t like that never will part of the statement.

Berkshire doesn’t pay a dividend because management feels they can achieve higher returns than the market average.

These are two fundamentally different approaches for Berkshire doesn’t state they will never pay a dividend like eBay does.

By definition Freetrade’s B shares, the ones we own, entitle shareholders to receive dividends which leads me to believe eBay’s approach won’t be replicated, or so I hope.