Bendigo vs Suncorp Dividend Showdown
So far I have not posted anything specifically looking at one company/share or another. However today something happened to Bendigo Bank that peaked my interest. It also highlight one of the things I look for when investing for dividends. Of course this is only ONE thing I look for, there are many others. I hope it goes without saying that you should make sure you consider more than just the dividend information when looking at a company.
Today Bendigo released their half year results to the market. Following that, I watched the share price drop over the day by almost 5% (4.99% to be exact). Thankfully I purchased my shares at single digit values, so dropping to $12 is not nice, but nothing to worry me today.
The reason for the drop is a mix of market expectations and a flat dividend. The market had expected a slightly better performance, leading to a slightly higher dividend payment. Instead, the company decided to pay the same 34c dividend they did last year.
Recap: Bendigo shares dropped to $12 and they will pay a dividend of $0.34c per share.
Suncorp is another company I was also considering purchasing shares in when I decided to make my Bendigo purchase. I went with Bendigo, not because I thought Suncorp was bad, but because I thought Bendigo was better (for what I wanted at the time anyway).
Similar to Bendigo, Suncorp announced their half year results recently on the 9th of Feb. Unlike Bendigo, the market seemed to view the announcements moderately favourably. The share price rose from $13.02 to $13.15, or about 1%, despite a slight hiccup initially. Part of the reason for this rise is their interim dividend was increased from 30c to 33c. That 10% rise was very nice increase for the shareholders, and for anyone who is a dividend investor.
Recap: Suncorp shares rose to $13.15 and they will pay a dividend of $0.33 per share.
Given the results were released so close to each other, it allowed something to really stand out to me. It is the reason I wanted to write this. This is want I noticed:
All else being equal (I know, its not), you can pay less for Bendigo, and receive a larger dividend!
For a dividend investor this is gold! One company said “we will pay you 33c” and people were willing to pay $13.15 for that privilege. The other company said “we will pay you 34c”, essentially one-upping Suncorp, and people started selling their right to obtain than dividend until the price hit $12.
I know that many different companies have different dividend yields. However watching the market react like this for two companies I considered so closely less than a year ago, really intrigued me. It also makes me question whether I missed anything obvious when going over their annual reports at the time. Ah, well – life is short, and the decision is made now. I am still reaping the benefits of the larger of the two dividends (in both absolute and percentage terms).
Well, that is it for now. Short and sweet. I will leave you with 2 questions:
- Are people interested in hearing more about specific companies/shares/bonds or not?
- How do other people keep track of the results companies produce? What websites, and tools do you use? And do you read over all the information, or just the headline numbers?
Definitely interested in reading about processes that real people use. I’m not a sharemarket investor yet, so I don’t keep track of companies.
Sounds good, I will see if I can do a post around the way I look at shares to buy. Although some of that will require me to actually think through some of what I do, which could uncover some large unknowns!
Thanks for sharing your thoughts on the companies. It will be great to see more post on shares and companies.
I am interested in hearing your thoughts on companies. I also agree that I think Bendigo is better than Suncorp, we’ll see what happens long-term. I don’t know much about banks (not a major draw for us), but this article: https://rogermontgomery.com/buyer-beware-when-betting-on-bendigo/ caught my interest about Bendigo.
That is an interesting article, thanks for sharing! I had not looked that closely at what the results would be like without the reverse mortgage style income. With that said, a large house price drop in Sydney or Melbourne would probably have much larger whole of economy impacts than just Bendigo. I think I will try and keep some cash on hand if this does eventuate, and buy while things are on sale (as people say).