Thanks @west @Slideup

Thumb sucking FY results, this probably puts them on a forward yield of 1.7%. Hard to think that this moves the dial for investors, who it's safe to assume are invested for the growth.

I know they have said they expect only $8-12m in additional operating costs to support revenues of $100m, and that EBITDA margins are expected (hoped?) to grow to 25% in the coming years. But I don't see the urgency in establishing dividends at this stage. At least pay down the debt first!

I think it's ill-advised @fcmaster26

In regard to AVA, I must have missed this stated policy -- can you point me in the right direction to where this is disclosed? (I cant see it in the annual report or recent presentations)

To my mind, a company should only pay a dividend only if it has no decent investment opportunities (either organic or inorganic). It's all about opportunity cost.

Would you want your company to pay out cash if it has the potential to reinvest that at a relatively low risk and high rate of return? You're literally throttling the future growth of the business.

For a business that isn't firmly cash generative or with a large excess of cash, it makes no sense at all -- especially if they are pursuing a growth strategy!

(btw, it's why I questioned Mike from Stealth Global on the recent call about their plans to pay a dividend in FY24. While it's a good sign of their confidence in future cash flows, as a shareholder I'd really prefer they didn't)

On the flip side, a company that has declining prospects should maximise cash payments and limit any investment that doesn't have a high chance of delivering attractive returns. You can actually do relatively well as an investor in industries experiencing structural decline if there's good capital management. Altria (tobacco) is a good example. Yeah, it helps to sell an addictive product with massive pricing power, but the reason why shares have done this:

...AND over a period where smoking rates have plummeted and company revenue went from >$100m at the turn of the century to $30m today -- is because they basically only spent the bare minimum to keep the existing plant and equipment operational and just ran for cash. Most of which was paid out to shareholders (shares are currently yielding 8%) or used to repurchase shares. They could have tried to pivot into theme parks or smart phones or whatever and blown up a bunch of shareholder capital -- but they had outstanding capital management.

Ethics aside, it's a masterclass in capital management.

@fcmaster26, I had, and still have, a big question mark over this as well. Someone pointed out that the EBITDA is a more consistent indicator of cash earnings, but I'm not really convinced by that argument https://strawman.com/forums/topic/6535. Why they would set themselves up for a potentially unsustainable dividend I am not sure, so I am assumming I am missing something in this, and that it isn't actually unsustainable at all. I will be looking at how this actually works in the full year report.

It is also a payout ratio of "no less than 35% of EBITDA" so 35% is the floor. For the 1st half EBITDA was $1.2m so say lets double this for the FY, the payout would be $840K this year with 243m shares this would be a dividend of 0.34c/share, which is around a 1-2% dividend yield.

@Strawman This is the announcement Ava dividend policy

I guess it really depends the nature of business. Definetly not a great idea for a company like AVA to rush into dividends. The last special dividends and capital return was insanely large. Last time when I asked about the dividend policy, the CFO said because the company is getting profitable, lots of people asked about dividend so they just made this policy. Not exactly a great decision making tactic though.

AVA is one of my favourite companies, many great things are happening, this dividend policy is definetly not one of them

Maybe AVA is just run by a group of super optimistic people.

I really don't think 0.34c/share is going to make much difference. Not even for the insiders.