DM Consunji (DMC) sustains dividend distribution, yields 8.5%

DMCHI Holdings (DMC) declared a cash dividend of 0.48 Pesos a share on 29 March 2021. The dividend declared per share is the same amount of dividend declared last year. With DMC closing at 5.65, the dividend declared would indicate a yield of 8.5%. DMC’s total dividend payout would amount to 6.37 Billion Pesos.

Some investors especially those with ESG mandate may have fled DMC because of its massive coal operations. Thus, DMC’s share price is slow to recover.

DMC might not be appealing to investors because of its coal operations but it is still a cash generating enterprise. Around 75% of DMC’s income comes from utilities with captive markets and consumers. These utilities generate tremendous cash. Semirara and the SPUG group generates power and sells it to their captive markets generating cash for the company. Coal might not be appealing to investors, but its coal operations will remain a primary source of cheap power in country generating money for stockholders. Another DMC investee company with a captive market is Maynilad Water. Everyone in Maynilad’s concession area pays the company for its services and that generates significant cash.

Another DMC company that is poised to benefit in this seemingly permanent low interest rate regime is DMCI Homes. The severely impacted real estate companies in these pandemic times are those companies exposed to commercial leasing. But for home developers the pandemic induced low interest rate regime is a boon. A low interest rate regime allows individuals to borrow easily for home acquisition and DMCI Homes being a pure play home developer stands to benefit in this regime.

DMC is not appealing to investors because of its unappetizing coal operations but it is a company with operations that can sustain an attractive dividend distribution.

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