When a Dividend Increase Really Isn’t

As a kid I enjoyed a good riddle every now and again but as the years went by thought I’d outgrown them to a large degree.  Until now.  One of the companies in my portfolio announced a dividend.  In reviewing the announcement (specifically the SEC 6-K filing), I noticed the dividend amounted to an increase of 13.16%.  Not shabby – in fact it exceeds the average of my portfolio (12.08% current).  So imagine my surprise to find the amount to be credited resulted in a 15.23% reduction!  Hmm … kind of blows away the increase, doesn’t it?   Of course I had to investigate – it appears like that’s what I seem to do.

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A Look ‘Down Under’

It’s been about two years since I first invested in Australian issues, choosing to take a slow approach while I obtained some practical experience first hand.  Certainly many of the yields are good, but the economy – much like Canada – is resource based.  Then there’s the whole franking deal.  Plus the foreign exchange conversion – but this has been relatively stable at 75 – 80 cents per USD.  Add to that, until recently the selection was limited to ADRs or using a cost prohibitive foreign desk.

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