Comment, question or quotation of the day

31-03-2020 : Quote of the day

“We should let the markets take care of all that is important, and leave what is essential to the State.”

André Comte-Sponville

30-03-2020 : Should companies applying for state financial support be prohibited from paying dividends?



It should be remembered that dividends in well-managed companies correspond to liquid assets that the company does not need to use in its business once it has reached a financial structure that corresponds to its objective. 


If, as a result of the health crisis we are experiencing, a company has liquidity needs, we have to be consistent and eliminate or sharply reduce the dividends paid, which are in no way an eternal commitment set in stone, but a discretionary cash outflow.


Then, and only then, can the company turn to the public authorities for help. By ceasing to pay dividends, it will thus strengthen its solvency (or avoid weakening it) before increasing its liquidity and indebtedness thanks to the Public Authorities (see our note of Friday 20 March).


It therefore seems to us financially (and politically) appropriate for the Public Authorities to make their financial assistance conditional on the cessation of dividend payments and share buybacks.


Good day and see you tomorrow. 


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The Letter

Number 128 of March 2020

News : Liquidity and solvency in this new world

Statistics : Easier said than done: the vote of institutional investors in favour of environmental issues during AGMs

Research : Dramatic drop in the number of listed companies

Q&A : If the dividend doesn't remunerate shareholders, what does?

COMMENTS : Comments posted on Facebook