Many Samsung investors had been calling on the company to boost shareholder returns so the company launched its Shareholder Value Enhancement Program in 2015. Since then, it has given out billions in dividends and spent billions on buying back shares to cancel them. The company confirmed in 2016 that it was thinking about a stock split.
The company’s board has approved a 50:1 stock split today as Samsung posted record profits for the final quarter of last year. It says that this decision was taken after many requests for a stock split were received based on the view that a high share price was keeping away retail investors.
Making it easier for retail investors to purchase stock
Samsung Electronics’ stock price closed at 2,495,000 won today which is roughly $2,342 per single share. Assuming that the Korean stock exchange has set a 10 share lot size for Samsung Electronics, it would mean that anyone willing to buy shares in the company must have at least $23,420 to buy a single lot.
A 50:1 stock split means that existing shareholders will receive 50 new shares for every single share they hold. This doubles the float – the total number of shares available for trading – and cuts the stock price in half.
Samsung believes that this stock split is going to make investing in the company more accessible to retail investors and will also provide dividends to a wider range of investors from 2018. It’s also going to add more liquidity to the company’s stock.
The board also approved a year-end dividend of around $20 per share today. It has already committed to doubling dividends this year. Samsung will increase annual dividends by 100 percent in 2018 and it’s going to maintain that level for 2019 and 2020.
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