Financial management 2 assignment october 2020 factors affecting enterprises dividend policy

HUTECH INSTITUTE OF INTERNATIONAL EDUCATION _ FINANCIAL MANAGEMENT ASSIGNMENT OCTOBER 2020 _ FULL NAME: PHAN THI NHU MY CLASS: 18BOBA01 STUDENT ID: 181401017 EMAIL: nhumyy2410@gmail.com LECTURER: NGUYEN THI MINH THUY PhanThiNhuMy 181401017 FinancialManagement2 Table of Contents I INTRODUCTION ABOUT THE SELECTED COMPANIES Binh Minh Plastic joint stock company COMECO joint stock company II COMPUTATION OF COMPANIES’ DIVIDEND PAYOUT Binh Minh Plastic joint stock company COMECO joint stock company III FACTORS AFFECTING ENTERPRISE'S DIVIDEND POLICY 12 Definition of dividend .12 Factors affecting dividend payment policy .13 IV ANALYSIS OF THE COMPANIES’ DIVIDEND PAYOUT 14 Dividend policies of Binh Minh Plastic joint stock company 14 Dividend policies of COMECO joint stock company 16 V EVALUATION OF THE COMPANIES’ DIVIDEND PAYOUT 16 Binh Minh Plastic joint stock company 16 COMECO joint stock company 18 VI SUMMARY 19 References 20 PhanThiNhuMy I 181401017 FinancialManagement2 INTRODUCTION ABOUT THE SELECTED COMPANIES Binh Minh Plastic joint stock company Binh Minh Plastic joint-stock company is a company specializing in manufacturing and distributing plastic pipes such as PVC-U pipes and fittings, pipes used in plumbing systems, pipes, and fittings of HDPE, PP pipes -R, agricultural sprays, etc The head office is located at 240 Hau Giang, Ward 9, District 6, HCMC The contact phone is 02839690973 Website address binhminh@binhminhplastic.com.vn Image Logo of Binh Minh Plastic joint stock company (http://www.binhminhplastic.com.vn, 2020) Binh Minh Plastic Factory was established on November 16, 1977, under the model of publicprivate partnership on the basis of merging Vietnam Chemical Plastic Pipe Company (KEPIVI) and Kieu Tinh Plastic Company The factory specializes in manufacturing all kinds of civil plastic products and some plastic pipe products with fittings In 1990, Officially registered for exclusive protection of trademark, trademark, and logo of Binh Minh Plastic in Vietnam After the equitization process, the company officially operated under the name of Binh Minh Plastic Joint Stock Company on January 2, 2004 This is an extremely important milestone marking a fundamental change in the Company's operating mechanism In 2006, the Company's shares were officially traded on the HOSE with the stock code BMP In 2013, the Certificate of conformity for products according to the regulations of the Ministry of Construction, increased charter capital to VND 454,784,800,000 In 2017, completing the conversion of the new ecofriendly additive system and launching a new product line of PP-R spare parts Currently, the market capitalization of Binh Minh Plastic Company is over 818 billion VND The product distribution system has about 1890 stores in Vietnam PhanThiNhuMy 181401017 FinancialManagement2 Vision: maintain its position as the leading enterprise in the plastic building materials industry in Vietnam proactively improve capacity and spirit to be ready to compete in the region and internationally Mission: To supply products and services to meet the growing needs of the market ensure the harmonization of interests of customers, employees, shareholders, and society Core value: high consensus - respect for the past - strong present - confidence in the future.90 stores which are widely distributed throughout the country of Vietnam COMECO joint stock company PETRO Vietnam joint-stock company (COMECO) operates mainly in the petroleum and oil business, in addition to fuel supply services, car wash services, petrol pump cylinder business, construction of civil and industrial projects, office for lease, premises, warehouse, etc The head office is located at COMECO Building Floor, 549 Dien Bien Phu, Ward 3, District 3, Ho Chi Minh City Phone (84-28) 3832 1111, Fax: (84-28) 3832 5555, Email: comecopetro@hcm.vnn.vn, Hotline: (84-28) 38 300 222 Image Logo of COMECO joint stock company (comeco.vn,2020) On December 13, 1975, COMECO was born, formerly known as the Petroleum Management Department under the Department of Transport of the City At that time, COMECO was in charge of managing petrol stations and supplying fuel for more than 5,000 public passenger and freight vehicles in Ho Chi Minh City In 2000, COMECO was chosen by the City People's Committee to develop the enterprise equitization project COMECO has built a solid foundation for development, becoming a strong brand in the petroleum business, the average growth rate after 15 years of equitization of the enterprise is over 24%/year The charter capital of the Company has increased from VND 16.2 billion in 2000 and now has increased to VND 141,206 PhanThiNhuMy 181401017 FinancialManagement2 billion The Company's shares have been listed on the Ho Chi Minh City Stock Exchange since the beginning of August 2006 under the code COM At present, COMECO has 38 petroleum branches in Ho Chi Minh City and neighboring provinces such as Long An, Ben Tre, Binh Duong, Dong Nai, Lam Dong Vision: Developing COMECO brand name is of service quality, leading to service quality in petrochemical business in Vietnam Improve service quality, satisfy customers' needs At the same time, to upgrade the infrastructure and invest in developing the petroleum retail network Diversifying business lines and developing added value for customers Mission: Training and coaching employees to create a difference to increase competition in business; developing COMECO Culture and Brand Preserve and develop capital Interested in the interests of customers, suppliers, shareholders, employees, and the community, society PhanThiNhuMy II 181401017 FinancialManagement2 COMPUTATION OF COMPANIES’ DIVIDEND PAYOUT Binh Minh Plastic joint stock company Revenue Billion VND 2016 3,678 2017 4,057 2018 Cost of good Billion VND 2,248 2,902 3,048 sold Gross profit Net income Equity Profit available Billion VND Billion VND Billion VND Billion VND 1,061 627 2,297 528 923 465 2,449 418 872 428 2,454 428 45,478,480 81,860,93 81,960,938 52,600 24,973 4,130 to ordinary shareholders Number of Share ordinary share Market price VND 191,000 85,600 per share Book value of VND 44,965 24,981 share Table The changes in the growth of Binh Minh Plastic joint stock company from 2016 to 2018 2016 Earnings per share= Stock price= 887,000,000,000 Net income = =13,787 VND Number of ordinary share 45,478,480 2,297,000,000,000 Equity = =51,000VND Number of ordinary share 45,478,480 Dividend per share=¿ ordinary share Profit available 528,000,000,000 ¿ = =11,610 VND Number of ordinary share 45,478,480 Stockholder value pershare=Stock price +Dividend pershare=51,000 + 11,610=62,610 VND 2017 PhanThiNhuMy Earnings per share= Stock price= 181401017 FinancialManagement2 Net income 465,000,000,000 =5,680 VND = 81,860,938 Number of ordinary share 2,449,000,000,000 Equity = =30,000VND Number of ordinary share 81,860,938 Dividend per share=¿ ordinary share Profit available 418,000,000,000 ¿ = =5,106 VND Number of ordinary share 81,860,938 Stockholder value pershare=Stock price +Dividend pershare=30,000 + 5,106 =35,106 VND 2018 Earnings per share= Stock price= 428,000,000,000 Net income = =5,228 VND Number of ordinary share 81,960,938 Equity 2,454,000,000,000 =29,998 VND = 81,960,938 Number of ordinary share Dividend per share=¿ ordinary share Profit available 428,000,000,000 ¿ = =5,228 VND Number of ordinary share 81,960,938 Stockholder value pershare=Stock price +Dividend pershare=29,998 + 5,228 =35,226 VND PhanThiNhuMy 181401017 FinancialManagement2 Dividend payout of Binh Minh Plastic Joint Stock Company from 2016 to 2018 70,000 62,610 60,000 51,000 50,000 40,000 35,106 30,000 30,000 35,226 29,998 20,000 13,787 11,610 10,000 2016 5,680 5,106 5,228 2017 2018 Dividend pershare Stock price Earning pershare Stockholder value pershare In general, we can see a clear difference in dividend ratios between 2016-2017 and 2017-2018 of Binh Minh Plastic JSC Looking at the chart, it can be seen that the period 2016-2017 has a strong decline between the indices, when 2016 is of very high value but almost halves in 2017 The period 2017-2018 is not much the volatility, it can be said that these indices are not significantly different First, the change of earning per share, in 2016 earning per share is 13,787VND, but in 2017 this value is only 5,680VND, down 8,107VND, approximately 58.8% over the previous year Second, dividend per share also showed signs of a sharp decline from 11,610 VND in 2016 to 5,106VND in 2017, a difference of 6,504VND or more than 56% Next, in 2016, the stock price is 51,000VND, but only 30,000VND, down 21,000VND, that is more than 41% compared to the previous year Finally, the stockholder value per share also fell similarly due to the decline in stock price and dividend per share, namely VND 62,610 in 2016 and VND 35,106 in 2017, a decline of VND27,504 by 44% The reason for the strong volatility of stock indices during 2016-2017 is mainly due to the change in the number of ordinary shares In 2017, Binh Minh Plastic Joint Stock Company announced a resolution on issuing bonus shares to increase charter capital from equity Binh Minh Plastic Company will issue approximately 36.4 million additional shares to existing PhanThiNhuMy 181401017 FinancialManagement2 shareholders at the ratio of 10:8 After the issuance, the company's charter capital will increase from VND 455 billion to about VND 819 billion This increase in charter helps enterprises have more potentials for business capital, bringing more opportunities in business activities At the end of 2016, the State Capital Investment Corporation SCIC had a plan to divest, causing BMP's stock to increase continuously, then the stock price gradually decreased when SCIC did not divest at the end of 2017 2018 is also the year that recorded a significant change for Binh Minh Plastics when the State Capital Investment Corporation (SCIC) sold the state capital to The Nawaplastic Industries Group (Saraburi) of Thailand In 2018, Saraburi continued to buy more shares in Binh Minh Plastic to increase his holding to 54.39% of the company's capital, and at the same time introduced staff to key positions of the company in which Mr Sakchai Patiparnpreechavud is Binh Minh Plastic President This event also affects stock volatility but not by much BMP's business results in 2017 with net revenue of VND 3,825 billion, an increase of 10% but profit before tax and net profit decreased by 25%, to VND 627 billion and VND 465 billion due to cost of goods sold and expenses sales soar COMECO joint stock company Sale Billion VND 2016 3,471 Cost of good sold Gross profit Net income Equity Profit available to Billion VND Billion VND Billion VND Billion VND Billion VND 3,186 285 110 425 84 3,837 2018 4,242 3,560 277 95 467 57 265 90 503 42 71 ordinary shareholders Number 2017 of Share 14,120,628 14,120,628 14,120,628 ordinary share Market price per VND 47,4 59,7 57,5 30,122 33,051 35,645 share Book value of VND share Table The changes in growth of COMECO joint stock company from 2016 to 2018 2016 PhanThiNhuMy Earnings per share= Stock price= 181401017 FinancialManagement2 Net income 110,000,000,000 =7,790 VND = 14,120,628 Number of ordinary share 425,000,000,000 Equity = =30,098 VND Number of ordinary share 14,120,628 Dividend per share=¿ ordinary share Profit available 84,000,000,000 ¿ = =5,940 VND Number of ordinary share 14,120,628 Stockholder value pershare=Stock price + Dividend pershare=30,098 + 5,940 =36,038 VND 2017 Earnings per share= Stock price= 95,000,000,000 Net income = =6,728 VND Number of ordinary share 14,120,628 Equity 467,000,000,000 =33,072 VND = 14,120,628 Number of ordinary share Dividend per share=¿ ordinary share Profit available 57,000,000,000 ¿ = =4,037 VND Number of ordinary share 14,120,628 Stockholder value pershare=Stock price +Dividend pershare=33,072 + 4,037=37,109 VND 2018 Earnings per share= Stock price= 90,000,000,000 Net income = =6,374 VND Number of ordinary share 14,120,628 503,000,000,000 Equity = =35,622VND Number of ordinary share 14,120,628 Dividend per share=¿ ordinary share Profit available 42,000,000,000 ¿ =2,974 VND = 14,120,628 Number of ordinary share Stockholder value pershare=Stock price +Dividend pershare=35,622 + 2,974 =38,596 VND 10 PhanThiNhuMy 181401017 FinancialManagement2 Dividend payout of COMECO Joint Stock Company from 2016 to 2019 45,000 40,000 37,109 36,038 35,000 38,596 35,622 33,072 30,098 30,000 25,000 20,000 15,000 10,000 7,790 5,940 5,000 7,728 4,037 2,974 2016 2017 2018 Dividend pershare Stock price 6,374 Earning pershare Stockholder value pershare In general, stock indices of COMECO Joint Stock Company not have a strong transformation in 2016, 2017, and 2018 Stock price and stockholder value per share show signs of increasing over the years, in contrast, earnings per share decreased slightly and dividend per share decreased and then increased again More specifically, dividend per share fluctuated slightly when 2016 reached 5,940 VND but in 2017 decreased to 4,037 VND by 32% compared to the previous year, to 2018 continued to decrease to 2,974VND, about 50% lower than 2,966VND compared to 2016 and about 26% lower than 1063VND, about 26% compared to 2017 The reason for this uneven fluctuation is that the dividend paid each year is different base on company’s operating activities, 2018 is the lowest because the business keeps the account retain earnings for other investment activities Earning per share value decreased steadily over the years, in 2016 was 7,790 VND, in 2017 decreased to 7,728 VND, about 0.8% lower than 62 VND compared to the previous year, this decrease was also negligible However, it is reduced more in 2018, earning per share is 6,374VND, about 17% lower than 1,354VND compared to 2017, 1,416VND lower, approximately 18% compared to 2016 This decline is directly affected by the Net income because the Net Income decreases steadily from 2016 to 2018 Although the revenue of the 11 PhanThiNhuMy 181401017 FinancialManagement2 company COMECO is increasing in the years 2016, 2017, 2018 In these years, the company's business activities are growing but Increasing market fees leads to a decrease in net income Although other values fluctuate, the stock price has steadily increased over the years Specifically, in 2016 the stock price was 30,098VND, in 2017 the stock price was 33,072VND, up 2,974VND, nearly 9% over the previous year Continuing to 2018 the stock price is 35,622VND, about 16% higher than that of 2016, 2,250VND about 7% higher than in 2017 The reason why the stock price increased steadily from 2016 to 2018 is due to COMECO's equity increased during this period In addition, in 2018, Comeco sets a target of 3,800 billion VNd in revenue and 45 billion VND in profit after tax As a result, in the first months of 2018, COMECO reached 3,169 billion VND in revenue, up 12% over the same period The profit after tax reached 65 billion VND, exceeding 44% of the profit target assigned for the whole year Before the news of high dividend payment, COMECO's share price rose sharply at the end of 2018, at a time of trading at 59,500 VND/share Similar to the stock price, stockholder value per share also shows signs of increase, especially in the period of 2017-2018 In 2016, this value was 36,038VND In 2017, it was 37,109VND, about 2.9% higher than in 2016 In 2018, the stockholder value per share continued to increase to 38,596VND, the difference was 1,487VND about 4% compared to 2017, about 7% higher than 2,558VND Compared to 2016 Since the stockholder value per share is the value dependent on dividend per share and stock price, the stakeholder value per share also increases when these two values increase, but the stockholder value per share increases here mainly because the stock price increases steadily for years III FACTORS AFFECTING ENTERPRISE'S DIVIDEND POLICY Definition of dividend The dividend is the company's after-tax profit paid to current shareholders Dividends can be paid to shareholders in various forms, such as in cash, in shares, or by property The selection of different forms of dividends has certain effects on the book value of shares, company value, and investment capital 12 PhanThiNhuMy 181401017 FinancialManagement2 For a joint-stock company, the Board of Directors will decide the rate and method of dividend payment based on business results and the dividend policy that the General Meeting of Shareholders has approved Factors affecting dividend payment policy Legal provisions: Dividend distribution must comply with certain legal regulations Needs to repay loans: If the company has used a lot of long-term debt to invest, it is necessary to retain a lot of profits to prepare for debt repayment Investment opportunities: If a company has investment opportunities that promise high growth potential, the company tends to keep most of its net profits reinvested The company's capital return: If the company has a higher capital return than other companies, shareholders tend to want to leave the majority of net profits for reinvestment and vice versa The stability of the company's profit: If the company has a relatively stable profit margin or is sure to increase in the future, the company can spend most of its net profit to pay dividend and vice versa Cash Flow: Paying dividends means an outflow of cash Firms only claim high dividends when they have a cash balance In the face of a lack of cash, the company claims no or very low dividends The ability to penetrate the capital market: Large companies, with a long operation time, relatively stable profits, high reputation often have the ability to easily mobilize capital in the financial market So these companies can spend a high percentage of their profit after tax to pay dividends and vice versa Growth opportunity: If a company has some investment plan then it should reinvest the company's income To invest in investment projects a company has two options, one to raise more capital or invest in its retained earnings Withholded income is a cheaper source because they have nothing to with the cost of converting assets and any legal proceedings Trends of the economy: During the economic recession, there are few investment opportunities, the market interest rates drop If the company has a need for capital, can easily borrow large 13 PhanThiNhuMy 181401017 FinancialManagement2 amounts of money with low interest rates, then the company can spend most of its net profits to pay dividends and vice versa Control of the company: If the shareholders of the Company want to maintain management and control over the Company, they often retain a large portion of their net profits for reinvestment and vice versa Personal income tax: Because personal income tax is usually taxed on progressive tax rates or there is a difference in tax rates between dividends and capital gains, many companies use such differences to determine the dividend payment IV ANALYSIS OF THE COMPANIES’ DIVIDEND PAYOUT Dividend policies of Binh Minh Plastic joint stock company Based on the Resolution of the Annual General Meeting of Shareholders 2016 of Binh Minh Plastic joint-stock company, the Board of Directors decided to pay dividends in cash at the rate of 20%, ie 2,000 VND per share, par value The price is 10,000VND Binh Minh Plastic has approved the 2016 cash dividend payment, at the rate of 40% The Company has advanced the 1st installment at the rate of 20% in January 2017, the remaining 20% will be paid out in June 2017 Pursuant to the Resolution of the 2017 Annual General Meeting of Shareholders of Binh Minh Plastic joint-stock company, the Board of Directors decided to effectively issue shares to increase share capital from equity at the rate of 18:10, ie a shareholder owning 10 shares according to the list will receive new shares The issuance method is as follows: Stock type: common stock Par value of shares: 10,000VND / share Stock code: BMP Number of additional shares: 36,382,784 shares Value of shares calculated at par value: 363,827,840 VND 14 PhanThiNhuMy 181401017 FinancialManagement2 2016 2017 COMMON STOCK RETAINED EARNING NUMBER OF 454,784,800,000 99,000,000,000 45,478,480 18 FOR 10 STOCK SPLIT 454,775,704,300 99,000,000,000 81,861,264 OUTSTANDING SHARES PAR VALUE BOOK VALUE 10,000 44,965 5,556 24,981 191,000 106,112 8,686,389,680,000 8,686,389,680,000 PERSHARE MARKET VALUE PERSHARE TOTAL MARKET VALUE Number of new share=45,478,480× Change∈ par vallue=10,000 × 18 =81,861,264 10 10 =5,556 18 Change∈common stock= (5,556 × 81,861,264 )−45,478,480=454,775,704,300 Change∈book value pershare=44,965× 10 =24,981 18 Change∈market value pershare=191,000× 10 =106,112 18 Based on the meeting minutes of the Board of Directors in October 2017, the decision to pay the 2017 first cash dividend is 15%/Charter capital, 1,500VND/share, par value is 10,000VND Second dividend payment of 2017 in cash at the rate of 25%, VND 2,500/share, par value of VND 10,000 Interim first dividend 15% /Chater capital in cash for 2018, 1,500VND per share, with a par value of a share 10,000VND The time of payment is in December 2018 Payment of the first two-year dividend of 2018 in cash at the rate of 25%, 2,500 VND/share 15 PhanThiNhuMy 181401017 FinancialManagement2 Dividend policies of COMECO joint stock company According to the resolution of the General Meeting of Shareholders in 2016, the decision to pay the first cash dividend of 2016 is 10%/charter capital In December 2016, the decision to pay 2016 second cash dividend is 40%/Charter capital, 4,000/share With more than 14.12 million shares outstanding, COMECO will spend about 56 (84) billion in cash on this dividend payment According to the resolution of the General Meeting of Shareholders 2017, the decision to pay the first cash dividend of 2016 is 10%, 1,000VND/share, par value is 10,000VND In December 2017, the decision to pay cash dividend was 20%/Charter capital, 2,000VND / share In February 2018, COMECO continued to pay a third dividend of 20% / share capital, 2,000VND / share In 2017, COMECO has made dividend payments with a total rate of 50%, far exceeding the plan of 15% With the number of outstanding shares, COMECO company spends about 57 billion VND for the 2017 dividend According to the resolution of the General Meeting of Shareholders in 2018, the decision to pay the first dividend of 2018 is 10%, 1,000 VND/share In January 2019, paying 40% cash dividend in 2/2018, 4,000VND/share In 2018, COMECO spent about 42 billion VND for a total rate of 50% V EVALUATION OF THE COMPANIES’ DIVIDEND PAYOUT Binh Minh Plastic joint stock company Dividend policy is one of the most important decisions in any joint-stock company to both achieve business efficiency and fulfill the obligations of the organization That is why the decision to pay dividends is recognized as of paramount importance The change in dividend payment is understood as a signal to shareholders and investors about the company's future earnings prospects In general, the increase in dividend payments is seen as a positive signal, transmitting positive information about a company's future earnings prospects leading to an increase in stock prices and subsequently the owner's assets Ownership becomes bigger Conversely, a decrease in dividend payments is considered a negative signal of future earnings prospects, leading to a decline in stock prices and investor wealth 16 PhanThiNhuMy 181401017 FinancialManagement2 Binh Minh Plastic joint-stock company has a decision to pay dividends in the form of shares by taking advantage of profits of the current and past years This is a combination of profit distribution and capital mobilization of the company Shareholders can not receive cash, but shares, from which they may receive interest on capital in the future There is essentially no change in the shareholders' equity, many companies that pay stock dividends can avoid paying taxes until the stock is actually sold Shareholders will receive a specific number of additional shares from the company based on the number of shareholders already owned In 2017, Binh Minh Plastic joint-stock company issued more than 36 thousand shares, split stock at the rate of 18:10, which means that a shareholder owning 10 shares will receive additional shares, totaling 18 shares promissory note The purpose of issuing additional shares is to increase the charter capital of the enterprise After the issuance, the company's charter capital will increase from VND 455 billion to about VND 819 billion That is, in 2017, shareholders will not be allowed to pay cash dividends but instead will be a form of the stock dividend The equivalent amount of dividend will be considered as the investment capital added by the owner to the business, transferred from the dividend paid account to the Charter Capital account, the shareholder does not have to pay cash for the investment Along with that, the number of shares of shareholders will increase, leading to an increase in the profitability of shareholders, because these shares can bring shareholders a high value of profits in the future from the business activities of the company In addition, the increase in charter capital makes the enterprise value increase, contributing to the increase in stock prices in the market, shareholders can receive a large profit due to the price difference from the sale of shares Next, receiving dividends in shares instead of cash helps shareholders to reduce personal income tax, if the income is over VND 600 million, it can pay tax up to 30% Paying stock dividends also helps businesses save on stock issuance costs Cash flow out of the company is limited, and shareholders also receive dividends by converting retained earnings into equity Paying stock dividends helps businesses reduce borrowing costs, helps shareholders save some kinds of costs, thereby increasing shareholders' assets However, paying stock dividends will cause the number of outstanding shares of Binh Minh Plastic joint stock company to increase, which may decrease stock price as financial ratios such as EPS will decrease in Short-term 17 PhanThiNhuMy 181401017 FinancialManagement2 COMECO joint stock company Companies paying high dividends are often seen by investors with good prospects and vice versa Therefore, the dividend policy has more impact on stock value Shareholders may receive cash dividends on the current accounting period or may also want to keep them to invest in future projects of a company that they find highly profitable Dividends are used by management to maintain a certain amount of income for shareholders in a company and to maintain stock prices in the stock market It will provide tangible evidence of a company's ability to generate cash An increase in share price can lead to an increase in shareholder wealth and vice versa The majority of shareholders not like risk, they prefer to pay dividends in cash rather than an interest in the future Because, "a bird in the hand is worth two in the bush" (Naveed, Bilal, Relman, & Abu Ttalib, 2013) Investors have a preference for a certain level of income now rather than the imagination of a higher level of income, but less certain at some point in the future COMECO's dividend policy is stable, does not cause sudden changes in the dividend policy, leading to the avoidance of the long-term effects of such changes on the company's value On the one hand, dividends are current and certain income, on the other hand, dividend policy can minimize expenses when income reaches shareholders since real income can be reduced due to weaknesses factors such as income tax, transaction costs In fact, some investors are very fond of companies with dividend policies that create a steady, reliable cash flow and they are willing to pay a premium for holding these shares However, "being too stable" can also lead to a business ignoring good investment opportunities, increasing the value of the company in the future In the case that COMECO does not want to ignore investment opportunities, enterprises will have to borrow, meaning there is an increase in financial risks, the problem of controlling the change after a period of stable operation is not at all easily Realizing that COMECO's dividend policy is safe but does not mean paying a low dividend Low dividend policy while an efficient company will increase the retained earnings rate, if the accumulated cash fund is too large, it will create the thought that the company is deadlocked in investing to continue growth At the same time, it creates risks for investors if the business operates and uses maintenance capital ineffectively, causing investors to lose the profits that should have been received earlier Firms 18 PhanThiNhuMy 181401017 FinancialManagement2 that keep the cash but fail to invest effectively can waste capital Next, COMECO's dividend policy is reasonable when the dividend ratio satisfies shareholders' needs in having a stable and sustainable cash flow in the long term but also ensures a billion The retained earnings ratio is enough to fund projects that create sustainable growth for the company If dividends are distributed at a high rate compared to income per share (EPS) that the company makes At that time, from the investor's perspective, the level of risk will be low because shareholders receive dividends and will realize assets from the dividends, which reduces the required rate of return of investors investment causes stock prices to go up But on the other hand, because profits are devoted to the distribution of dividends to existing shareholders, the company is forced to give up potential investment opportunities, causing the rate of future dividend growth to decrease and will decrease stock price If dividends are distributed at a low rate to income per share (EPS) From the investor's perspective, the level of risk will be high and accordingly, the required rate of return will be higher, resulting in lower stock prices, but in return, due to reinvesting profits, the rate increases In the future, the dividend growth of the shareholder will be high, causing the cash flow of the shareholder to increase and increase the share price 19 PhanThiNhuMy VI 181401017 FinancialManagement2 SUMMARY In recent years, the decline in economic growth due to the impact of the global economic crisis has made Vietnam's stock market more volatile, especially since stock prices that have erratic changes The stock price is an issue that many investors and society are very concerned about, is the most important issue for businesses To add value to the business, ensuring the business operates at a loss-free and highly profitable business, managers must make important long-term business and financial decisions with the goal of maximizing Enterprise value Therefore, the improvement of corporate value through the most influential factor, the dividend policy, is of great significance to companies listed on the stock market of Vietnam Dividend policy is one of the important decisions affecting company value and performance Dividend policy is a policy that determines how much profit after tax of an enterprise will be distributed, how many percent will be retained for reinvestment and dividend payment to shareholders The dividend policy will affect the amount of equity in the company's capital structure (through retained earnings) and the firm's cost of capital The dividend payment policy may be affected by factors such as legal, investment opportunities, liabilities, business performance during the year, taxes, etc In fact, through the process of research, it was found that these factors affecting companies on the HOSE were Binh Minh Plastic joint-stock company and COMECO joint-stock company These factors influence the decision on how many percent to pay dividends, to pay dividends in cash or in stock In 2017, Binh Minh Company decided to pay dividends to shareholders in the form of shares with stock splits 18:10 This approach helps increase charter capital for the business, increase the number of shares for shareholders, reduce personal income tax for shareholders, can generate greater profits in the future COMECO's side has implemented a stable and firm cash dividend payment policy Create a stable source of income for shareholders who own stocks, reduce risks for shareholders and the whole business, create peace of mind for corporate dividends 20 PhanThiNhuMy 181401017 FinancialManagement2 References Borad, S B (2019, August 31) Factors affecting Dividend Policy Retrieved from efinancemanagement: https://efinancemanagement.com/dividenddecisions/factors-affecting-dividend-policy Financial Report (2016) Retrieved from BinhMinhPlastic: http://www.binhminhplastic.com.vn/ Financial Report (2016) Retrieved from COMECO: http://comeco.vn/Default.aspx Financial Report (2017) Retrieved from BinhMinhPlastic: http://www.binhminhplastic.com.vn/ Financial Report (2017) Retrieved from COMECO: http://comeco.vn/Default.aspx Financial Report (2018) Retrieved from BinhMinhPlastic: http://www.binhminhplastic.com.vn/ Financial Report (2018) Retrieved from COMECO: http://comeco.vn/Default.aspx Introduction (2020) Retrieved from BinhMinhPlastic: http://www.binhminhplastic.com.vn/ Introduction (2020) Retrieved from COMECO: http://comeco.vn/Default.aspx Kiều, N M (2012, February 13) Chính sách cổ tức Retrieved from bvsc.com: https://www.bvsc.com.vn/News/2012213/183189/chinh-sach-co-tuc.aspx 21