HmmmI hate to throw cold water on the strong financial results of late, but the company's history still concerns me, as an investor.
It boils down to this: I like to
truly invest in companies by buying and holding long term if I believe they have a solid future AND assuming I will be rewarded accordingly. The latter condition, reward, is what gives me pause with VNP.
The earliest VNP listing I see on the tsx is december, 2007. So let's say I bought in then at $7.20. After all those years and company earnings/growth, I would be sitting today with a 40% loss! Compare the TSX total return index over that same period, which would have yielded me approximately 260%, and given that it is a much more diversified investment, I would have slept better throughout the period.
One key to the latter investment pertains to it being 'Total Return'. In other words, it pays a regular dividend. I know people will claim the company will grow faster if they reinvest all earnings in themselves, but what has that gotten investors over all these years. And who is to say that the future unfolds as company representatives predict/hope. Lawsuits, new competitors, a regime shift in China...who can predict the future accurately.
A small, but growing, dividend with a modest payout ratio would have the following possible effects:
- investory loyalty
- a possible floor under share price
- if payout ratio is modest, they could still reinvest heavily internally
I've been at this game for a long time, and I've heard the same rationale for zero dividends from execs at many other similar sized companies, and the one commonality I've witnessed is that when such companies hit a rough patch or the general market tanks, the non-div company's share price trends down to their tangible book value, because there is nothing else SOLID to support it; only management hyperbole. VNP Book value per share currently stands at approximately $1.73.
VNP anagement has been handsomely rewarded over the years. When do long term shareholders get to participate in the company's earnings?