Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, has proposed issuing cash dividends twice a year instead of annually.
In its annual report filed with the Taiwan Stock Exchange, the Taichung-based company said that a proposal about how to pay cash dividends is on the agenda for its annual general meeting on June 10, at which shareholder approval for the change will be sought.
If the proposal is passed, shareholders are expected to receive dividends on Largan’s earnings for the first half of this year in the fourth quarter.
Under the proposed payout policy, shareholders next year would receive dividends from company earnings in the second half of this year.
WOOING INVESTORS
Largan changing its payout schedule is an effort to encourage investors, in particular foreign institutional investors, life insurance companies and other institutions, to hold on to the company’s shares for the long term, analysts said.
If the proposal is passed, Largan would join a list of companies that have changed their payout schedule.
In 2018, shareholders of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) approved a proposal to issue cash dividends from 2019 on a quarterly basis, instead of annually, the first company listed on the Taiwan Stock Exchange to do so.
Prior to Largan’s proposal to issue dividends every six months, it raised its payout ratio to attract investors.
In February, the company proposed issuing cash dividends of NT$91.5 per share on last year’s earnings per share of NT$182.9, a 50.03 percent payout ratio, the first time in 11 years the ratio surpassed 50 percent.
Over the past decade, Largan’s payout ratio has been 30 to 40 percent.
If the schedule change is approved next month, the company would pay out NT$12.27 billion (US$438.5 million) in cash dividends on last year’s earnings, the most for any year in its history.
Largan said in the report that it spent a record NT$3.79 billion on research and development last year, up 1 percent from a year earlier.
Research and development spending accounted for 6.78 percent of its overall sales last year, the ratio a company record, it said.
Largan’s shares have been under pressure in the past few sessions amid concerns over the COVID-19 situation and a loss of orders from China’s Huawei Technologies Co (華為) in the wake of US sanctions.
Shares of Largan rose 0.87 percent to close at NT$2,980 yesterday due to the new dividend payout policy.
Before the latest gains, the stock had plunged almost 45 percent from a high of NT$5,180 in January last year.
On the broader market, the TAIEX closed down 13.32 points, or 0.08 percent, at 16,132.66 yesterday, with TSMC shares falling 0.87 percent to close at NT$567 and iPhone assembler Hon Hai Precision Industry Co (鴻海精密) dropping 1.87 percent to NT$105.
Turnover totaled NT$438.314 billion, with foreign institutional investors selling a net NT$29.38 billion on the main board, compared with net purchases of NT$22.13 billion on Tuesday, Taiwan Stock Exchange data showed.
Turnover was moderate, as many investors are watching closely whether the number of domestically transmitted COVID-19 cases continues to climb, dealers said.
After the market closed yesterday, the National Health Command Center’s Central Epidemic Command Center raised the nationwide COVID-19 alert to level 3, with Taiwan recording more than 100 locally transmitted cases for the fifth consecutive day.
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