Generous dividend plans warm investor sentiment

Generous dividend plans warm investor sentiment

Following a period of steep decline and modest recovery, shareholders of Tien Phong Commercial Joint Stock Bank (TPBank) were buoyed by a gain of just under 5 per cent on the share price during the May 12 trading session.

The uptick was driven by TPBank's forthcoming cash dividend plan, with the bank announcing it will pay a 10 per cent cash dividend on May 23, meaning each share will receive VND1,000 ($0.04).

TPBank is expected to disburse $105.6 million for this dividend round. The record date, which determines eligibility, was May 14. Investor enthusiasm drove strong buying interest on May 12, resulting in the stock’s most significant gain in a month.

Meanwhile, Vietnam International Commercial Joint Stock Bank (VIB) finalised its shareholder list on April 23 to pay a 7 per cent cash dividend, with a payment date also set for May 23. This equates to a projected payout of $83.4 million.

2025 is shaping up to be one of heightened dividend payment among banks, particularly in cash form. Alongside TPBank and VIB, several other banks are rolling out similar plans, including Techcombank, Military Bank (MB), Asia Commercial Bank (ACB), VPBank, Saigon-Hanoi Bank (SHB), Loc Phat Bank (LPBank), and Orient Commercial Bank (OCB).

Among them, LPBank has garnered significant attention with a proposed 25 per cent cash dividend, the highest in the banking sector, equivalent to a payout of $298.7 million.

Speaking at the bank’s annual general shareholders meeting on April 27, chairman Nguyen Duc Thuy said, "The board is aiming at high dividend payouts in the upcoming years, possibly 20 per cent in cash or 5–7 per cent in stock for the next year." The record date for LPBank’s upcoming dividend was May 20.

Meanwhile, ACB is planning a 25 per cent total dividend (10 per cent in cash and 15 per cent in stock), and MB will pay out 35 per cent, including a 3 per cent cash payout valued at $73.2 million.

Other banks’ projected cash dividend ratios include Techcombank at 10 per cent, OCB at 7 per cent, with SHB and VPBank at 5 per cent each.

In total, the nine aforementioned banks are set to distribute more than $1.32 billion in cash dividends, a record high for the sector.

This figure may rise further, as HDBank revealed that it is keeping more than $405 million in undistributed profits, and the bank’s leadership expressed an intention to distribute a maximum of 15 per cent dividend payment in cash in a meeting with shareholders in late April.

Last year, the same group of nine banks, disbursed an estimated $1.2 billion in cash dividends, marking a notable increase over 2023 in both the number of banks and the size of distribution.

Beyond the banking sector, firms from various industries are also offering lucrative cash dividend payment to shareholders.

For instance, Hau Giang Pharmaceutical JSC (DHG) announced it will finalise its shareholder list on May 26 for a 60 per cent cash dividend-equivalent to VND6,000 ($0.24) per share.

The payment is scheduled for June 18. With over 130.7 million shares outstanding, DHG will allocate nearly $31.4 million in dividend payment.

Meanwhile, FPT Online Service JSC (FPT Online), part of tech giant FPT Corporation, managed a 100 per cent cash dividend las year, its highest since 2021, amounting to a planned payout of around $7.4 million. The payment is set for June 27.

Companies with high and consistent dividend payouts are widely regarded as strong defensive investments, particularly during periods of market volatility.

Annual dividend yields are often sourced from large-cap, financially robust, and operationally efficient businesses.

According to Ho Chi Minh City-based investment firm Mirae Asset, a stable annual dividend yield of around 5 per cent or more is considered attractive compared to average savings interest rates.

High cash payouts combined with low financial leverage provide reassurance to long-term investors.

Consistent dividend flows also support the 'dividend reinvestment' strategy, enabling effective wealth accumulation. Moreover, such stocks tend to be more resilient to broad market sell-offs, underscoring their defensive appeal.

VIR