Silver Wheaton Declares First Quarterly Dividend Payment

Article Summary

Fin 350

April 30, 2012

Silver Wheaton Declares First Quarterly Dividend Payment

Silver Wheaton is the world's largest silver company and on March 22 of this year, the board of directors approved a new dividend policy. The company is to pay out a quarterly dividend of twenty percent of its cash generated through operating activities. The announced payment of $.09 a share is said to be rewarded to common shareholders of record on the close of business on April 4th and will be paid out on April 17th. This is Silver Wheaton's first ever quarterly dividend payment and the decision of future dividend payments ultimately remains up to its Board of Directors.

Silver Wheaton's authorization of its new dividend policy can be viewed as a signaling theory by investors in a couple of different ways. First off, one would need to review Silver Wheaton's revenue from operations since this is where the dividends will be paid from. Ultimately the investor needs to track the current and forecasted price of silver. By doing so, investors would be able to either view the announcement as positive or negative. If future estimates are positive, it is easy to understand why the company wishes to give back to its shareholders. However, if future estimates are negative, investors may need to be cautious as the company could be issuing the dividend to attract and maintain current shareholders.

The article can also be seen as supporting the clientele effect. The recent uptrend in both gold and silver prices have caused the media and financial experts to commend the two assets as having real/durable value in times of economic uncertainty. This has caught the eye of retired and matured investors alike. Silver Wheaton may be issuing a quarterly dividend because it wishes to fulfill and capture some of these mature clientele preferences.

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http://www.silverwheaton.com/News1/PressReleases/PressReleaseDetails/2012/Silver-Wheaton-Declares-First-Quarterly-Dividend-Payment-for-20121128716/default.aspx