Hi, I have just purchased shares valuing 0.1% of two different airlines. I know it’s small fry, but I was wonderingif someone could help me work out the expected dividends these will pay. I have read on the forum that the dividend is 15% of profit. Is this correct? If so is this then divided up amongst shareholders and paid as their dividend?
I’d be really grateful for any help and advice.
Precisely.
An example, with simplified numbers so I don’t have to think that much…
Airline makes 100 million AS$ profit. This means 15 million is distributed to the share holders. You, holding 0.1%, or say 1 in 1000 shares, would get 15.000 AS$ in dividends for your share.
But very few airlines make 100 million profit. So the money you can earn by waiting for dividends is insignificant. Simple put it … it doesn’t worth investing. If you invest that money in an aircraft you will have much better revenue.
Thanks, that explains things clearly. I just wish my dividends were higher, but hopefully buying so soon in the life of the server should help!
Indeed, the revenue from an aircraft is way better, but that’s not the main idea why you buy shares in this game.
Here, you buy shares from your competitors or from big, succesfull companies, in order to see their Seat Load Factor and other relavant things.
I never said it was a realistic number, I just used something easy to work with.
Investments such as these are generally a long term investment anyway. Say you buy the shares now, at 200 AS$. The airline keeps growing, profit keeps increasing, you get more and more money every week, plus the shares, a few months down the line, are suddenly worth in excess of 400 AS$.
Yes, you’ll be able to make money quicker by operating an aircraft instead of buying shares, but if you don’t know what to do with your money, then you could always consider it. Beware though, airlines may cease to exist any point in time, or they may become inactive and get into a downward spiral. It’s not unlikely that you may loose (significant amounts of) money while trading on the stock exchange… Much like in real life, I suppose.
Your all also forgetting the holding company factor…
I list my subsidiary and thus a dividend is paid to the holding enterprise aswell as the other shareholders.
My Enterprise can then use this income to purchase shares in other companies and create itself a larger income via more dividends.
With that larger income my enterprise can then purchase planes in AS$ and lease them to my own Sub (in essence for free), it can also allow the holding enterprise to build terminals and lease these to the Sub, thus driving down costs/increasing profit.
I could even purchase enough shares to buy out other airlines (in time)
Obviously all this is longer term, but the stock market has its uses
I think it depends on where you buy. If you can buy an aircraft at 50% of it’s valuation and give it a couple of days you could make a significant amount on the money you put in. You might not make as much dividend wise as you would investing that into another aircraft however your overall value of your company will increase. If you put 5million into leasing an aircraft then your company just lost $5million in value.
If you put $5million into an airline and it’s value doubles then you can either sell those shares or your value will increase by another $5million. So now you have $10million in value which is helpful if you’re wanting to do things like lease aircraft etc