SHAREHOLDERS in investment holding company, Sterling Investments Limited last Friday received a big 52.32 per cent increase in dividend payment.

This was due to the fact that the company, managed by Sterling Asset Management, increased its dividend payout ratio on realised gains by 30 per cent. Dividends are paid in tax-free United States dollars (USD).

Sterling Investments declared a dividend of US$0.000361 per share (JMD equivalent $0.05049), payable on September 4, 2020 to shareholders on record as at August 25, 2020. The ex-dividend date was August 24, 2020.

Previously, Sterling Investments would pay out 50 per cent of realised gains and distribute the same as dividends to shareholders. However, the change in policy of increasing the dividend payout ratio by an additional 30 per cent was decided at a board meeting held on August 10, 2020.

At that meeting it was agreed to increase the payout ratio to 80 per cent. As the company continues to grow, investors will find themselves earning larger amounts by way of dividends.

WELL-NEEDED USD LIQUIDITY

In making the announcement in a press release yesterday, the management of Sterling Investments expressed the hope that the move will provide well-needed US-dollar liquidity to its shareholders, who are operating in an environment where the exchange rate is depreciating at a rapid rate.

As at August 31, 2020 the dollar depreciated by 12.6 per cent but peaked at $151.18 to US$1 on August 21, 2020.

This increase in dividend is seen as a welcome boost to shareholders, considering that dividends by some of the largest companies have been eliminated for this year. As such, it is fitting that Sterling Investments has listened to its shareholders and increased its dividend payout ratio.

Shareholders were encouraged by the fact that Sterling Investments dividends are paid tax-free, as the company is incorporated in St Lucia. As at August 31, 2020 the dividend yield for the company was 2.78 per cent, and this is expected to increase.

Sterling Investments pays dividends twice a year in hard currency as a result of its holdings of US-denominated assets. The previous dividend paid by the company was US$0.000237 per share, which was in March 2020.

HALF-YEAR FINANCIAL PERFORMANCE

Amid the COVID-19 pandemic Sterling Investments managed to eke out an increase in net profit of 30 per cent since 2019. The first six months of 2020 saw a total revenue of $131.32 million versus the $76.8 million observed for the same period in 2019.

Sterling Investments is generating more income post-COVID-19 than it was before. Investors will continue to benefit from the US- dollar income that the company’s portfolio generates through dividend payments.

Net income increased by 30.25 per cent up from $57.13 million for the six months ended June 2019, to $74.41 million for the six months ended June 2020. Foreign exchange gains increased more than twofold from $28.84 million in the period ended June 2019 to $64.29 million in the period ended June 2020.

The increase constitutes gains of 122.96 per cent over the period, which were due to the combined result of increases in interest income and unrealised foreign exchange gains. Total assets increased by 11.78 per cent from $1.49 billion as at June 2019 to $1.67 billion as at June 2020.