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Sterling Investments shareholders may convert dividends to new shares

Published:Wednesday | May 25, 2016 | 12:00 AM
Charles Ross, CEO of Sterling Asset, the management company for Sterling Investments Limited.

Sterling Investments Limited has drafted two plans meant to making it easier for stockholders to acquire shares in the company while constraining fees.

The company said it will offer a dividend reinvestment programme, or DRIP, and a complementary share purchase programme, referred to as COMP.

The strategies are not popularly employed in Jamaica, but at least one other company is known to utilise them.

Sterling's shares trade on both the Jamaican dollar and US dollar platforms of the Jamaica Stock Exchange. The DRIP will allow Sterling investors to automatically convert their dividends into new share purchases.

"The benefit of that is that they would increase shareholding because they buy more shares. So they would keep seeing their asset value increase," said a source who spoke on condition of anonymity.

Sterling head Charles Ross was travelling and unavailable for comment on Tuesday.

The COMP will give shareholders the option every quarter to buy shares directly from Sterling. In doing so, the transaction will become 'free of fees" including brokerage and other transaction fees,' added the source.

Shareholders will be advised further on details about the workings of both programmes within the coming months, the company stated in a market filing last week.

"The DRIP will result in other listed companies following suit," the source believes.

Sterling paid dividends totalling $17.5 million in 2015, and has so far distributed around $8 million in the first quarter of 2016.

FOREX GAINS

The investment company made net profit of $19.2 million for its March quarter on revenues of $28.4 million or 86 per cent higher profit than the March 2015 quarter, due mainly to foreign exchange gains.

The forex gains stemmed mainly from an increase in the rate of devaluation in the March 2016 quarter relative to the 2015 period, Sterling said.

The Jamaican dollar depreciated against the US dollar by $1.66 or 1.4 per cent for the quarter or roughly three times faster than year earlier levels. As a result, Sterling booked unrealised foreign exchange gains of $11.1 million for the for the quarter, up $8.7 million or 379.2 per cent increase relative to last year.

Sterling expects a "more positive" outlook in the quarters ahead despite the expected volatility in the bond and equity markets, saying its portfolio is well balanced and poised to take advantage of trading opportunities presented.

steven.jackson@gleanerjm.com