Taipei--The Taiwan Stock Exchange (TWSE) has disclosed the average cash dividend yield on the local main board, a move that brings the local equity market into line with international practice.
The disclosure of the average cash dividend yield, which began in January, comes with other market information released by the TWSE, on market capitalization, average turnover ratio, average price to earnings ratio (PE), average price to book value ratio (PB) and average turnover ratio.
The cash dividend yield represents the ratio of the annual cash dividend a company pays to its share price. A higher dividend yield means investors receive a higher return from their investments.
The TWSE said that with more listed companies on the local equity market preferring to give cash dividends to shareholders, like their international counterparts, the exchange now discloses the cash dividend yield to investors each monthly.
For example, Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on the local market, paid NT$6 (US$0.19) in cash dividend for each share for its 2015 earnings, and based on its closing price of NT$185.50 on Friday, the cash dividend yield for TSMC was 3.23 percent, higher than the annual bank deposit rate of about 1 percent.
The market expects TSMC to provide a cash dividend of more than NT$6 for 2016 earnings, as the chip maker was more profitable last year.
In the past, listed companies in Taiwan tended to give stock dividends rather than cash dividends and many companies still issue a dividend made up of a cash dividend and a stock dividend.
Under such circumstances, the TWSE has chosen to disclose average dividend yield, which is comprised of the cash dividend and stock dividend, as well as average cash dividend yield on a monthly basis, which better reflects the value of the market.
As an increasing number of listed companies give cash dividends, the TWSE said, the gap between the average dividend yield and the average cash dividend has narrowed.
At the end of January, the average dividend yield stood at 4.26 percent, while the average cash dividend hit 3.88 percent. The gap of 0.38 percentage points between the two measurements represents a fall from the 0.39 percentage points recorded in 2016.
The TWSE said that the exchange will consider choosing to disclose the average cash dividend yield instead of the dividend yield if the cash dividend yield information is well accepted in the market.
Source: Focus Taiwan News Channel
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