CCME - Even if they permanently lost profitability and started breaking even every quarter, they could pay 10M each year for 20 years before they would run out of cash.
Put this into perspective: some companies in this space (hint hint) have almost no cash at all, and are having great difficulty generating it, yet they trade at higher P/E's than CCME!
A 10M per year dividend, 11% of net income, would be the same as Exxon Mobil's dividend, Walmart's dividend, etc. What mutual fund will have a problem with that?
A dividend does five things:
1) It neutralizes the USX China stigma, adding tremendous credibility to the equity, and proving that American investors really do own the company and all of its cash flows. The USX China stigma is no small matter: it is the single biggest obstacle to value realization right now. Were it not for that stigma, the space would double overnight just on multiple expansion.
2) It forces value recognition in market downturns, because as the stock goes down, the dividend yield goes up.
3) It makes for an alternative means of value realization. Right now, the only way to realize value in a CCME investment is to sell--and notice that the moment we get a bounce, that's what everyone wants to do. Sell.
If they want the stock to steadily appreciate, they need to make it the kind of stock that an investor can put in an IRA with a DRIP and forget about for the next 10 years, returning to a surprise of 1000% gains.
4) It discourages short selling, because the dividend payment gets deducted from the cash balance of the short seller every quarter. Why go to a stock like that for a short, when you can short a myriad of other stocks with neither a dividend nor the cash flow to support one?
5) It attracts long term shareholders, the kind that will remain comitted to the stock as it grows. People get frustrated that CCME management doesn't do something to make the stock rise to $20, but why should management care if the stock rises to $20? So that present shareholders can ditch the company and move elsewhere? Wham, bam, thank you ma'am? LOL.
A company like CCME needs strong longs that will stick around as the company grows and realizes its true worth. Committed shareholders that will support the stock in a downtrend. You attract those kinds of buyers--Warren Buffet type buyers--with a consistent dividend.
I urge every investor to continue to bombard Jacky with emails. If the issue is wanting the extra cash to ensure the make goods are met, the board can adjust the make goods in proportion to the dividend payout.
There is no question the make goods will be crushed at this point, hell I would be willing to just waive them altogether and give Zheng the shares right now, and then buy them back from the market with funds from this growing cash mountain lol.
Let's get this stock out of toxic trader hands and into the hands of committed shareholders.
