Singapore Telecommunications a.k.a. Singtel (SGX:Z74) is offering shareholders the option of receiving FY2021 interim dividend in the form of scrip or shares instead of cash by default.
Details of the offer (refer to Scrip Dividend – Singtel):
- Dividend amount: $0.051 per share
- Period: April 2020 – March 2021
- Record date: 5pm on 27 November 2020
- Last day to elect for scrip dividend: 5pm on 30 December 2020
- Dividend payment date: 15 January 2021
- Listing and crediting of new shares: 18 January 2021
- Scrip price: $2.422 per share
Disadvantages:
- Shareholders may receive new shares in odd lots (Singtel shares trade in board lots or 10 and 100 shares each)
- Fractional entitlements: Rounded down to the nearest whole number. No cash will be paid on disregarded fractions of new shares, unless entitlement is less than one new share.
- Scrip price of $2.422 is 4% above market price of $2.33 (as of 3/12/2020 close).
Advantages:
- Save on brokerage commissions. Election for scrip dividend will be done via CDP online platform. I’m not sure if there will be a nominal charge like applying via ATM.
My entitlement:
I hold 1300 shares of Singtel, so I’m entitled to receive $66.30 dividends in total. That translates to 27 new shares after rounding down fractional shares ($66.30 / $2.422 = 27.4).
Conclusion:
As you can tell, the cons far outweigh the pros, even if you’re bullish on Singtel long-term. I don’t find this scrip dividend option attractive at all. IMO, no point opting for scrip dividend unless you really don’t have cash to buy a full board lot.
Personally, I won’t be applying since I have a bit of cash and might as well top up to buy at least 100 shares for $233 @ $2.33 per share (as of 3/12/2020 close).
I’ll be looking into Singtel a bit more to decide whether to buy more shares in coming weeks. No rush since this scrip dividend isn’t attractive.
Let me know what you think. If you’re a shareholder, will you be opting to receive your dividends in cash or scrip?
Disclosure: I am long SingTel Z74