Taiwan Semiconductor Manufacturing Co (TSMC) has dashed hopes that it would pay out its first cash dividend on its common shares after years of issuing stock dividends, which dilute earnings per share.
Directors said eight new shares would be doled out for each 100 held by investors - upsetting hopes for an anticipated NT$1 (about 22.44 HK cents) per share payout by Taiwan's largest firm and the world's No 1 contract chip foundry.
Shares of TSMC closed down 1.36 per cent at $43.40, erasing an early 2.5 per cent gain although news of the dividend decision did not come out until the market closed.
TSMC's decision to stick with share dividends was despite it having a cash balance of $61.7 billion at the end of December.
The share dividend will enlarge TSMC's share capital by about 8 per cent, but exert the lowest dilution effect of the past eight years. TSMC has issued annual share dividends of between 10 per cent and 80 per cent, hoping to keep shareholders loyal.
However, shareholders would prefer companies to return cash, rather than shares, especially when markets and the global economy are in the doldrums.
