It said in a stock exchange filing on Wednesday that the board of directors approved a special cash dividend of P0.180 per common share.
The record date for Converge’s first-ever dividend payout is set for Sept. 24, 2024, with the payment date scheduled for Oct. 10 this year.
Moving forward, the board also approved a payout policy of 25 to 30 percent of net income, based on the latest audited financial statements.
The board retains full discretion over the amount, type, and timing of future dividend payments.
Big picture
Converge, which trades under the stock symbol CNVRG, has withheld dividend payments since its 2020 initial public offering, prioritizing business growth instead.
Its management had previously indicated plans to pay dividends in 2025.
Dividends are sourced from a company’s retained earnings. Thanks to robust earnings, Converge had registered retained earnings of about P12.1 billion as of the end of the first half of 2024.
Analyst view
Alfred Benjamin R. Garcia, research head at AP Securities Inc., said the dividend payments would add value for shareholders.
“We also acknowledge that the dividend policy of 25-30 percent of net income is significantly lower than that of PLDT (75 percent of core earnings) and Globe (60-90 percent of core earnings),” he told InsiderPH.
Cherry on top
“However, CNVRG has a lot more growing and spending to do for it to reach full maturity, so the lower dividend policy is expected,” Garcia said.
“In other words, what makes CNVRG an attractive company is its growth potential and not its dividend yield. The dividends are just the cherry on top,” he added.
Stock market rally
Separate from the dividend policy approval, AP Securities changed its rating on Converge from “Buy” to “Hold” after the stock’s recent rally exceeded its target price of P16.04 per share. Converge’s stock has nearly doubled so far this year due to its strong financial performance and anticipation of dividend payouts.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
