Merkado Barkada
September 12, 2024 | 8:00am
Converge [CNVRG 16.94, up 4.2%; 217% avgVol] [link] declared a special cash dividend of P0.18/share out of its FY23 unrestricted retained earnings, payable on October 10 to shareholders of record as of September 24. The dividend carries a yield of 1.1% based on the stock’s pre-announcement closing price. It’s the first dividend from CNVRG since its 2020 IPO. CNVRG is owned by Dennis “Pampanga Dennis” Uy (known on X as @TheFiberMaster). It listed at an IPO price of P16.80/share and peaked at around P44/share back in October 2021.
MB bottom-line: While CNVRG is down over 60% from that 2021 high, it’s doing a lot better now than it was just a year ago when it was trading alarmingly deep into the single digits. It’s up 122% from its 52-week low of P7.63/share, and it’s up 44% over just the last month. To younger investors who might have just recently considered dividend-generating investments as part of their portfolio with REITs and maybe preferred shares, a yield of 1.1% probably sounds a little hilarious. But for long-term investors who have identified CNVRG as one of their picks (for whatever reason) and who have no intentions of selling, this dividend is just pure gravy and the best part is that it opens the door to the possibility of future dividends. Yes, the underlying business has been losing momentum from a profitability perspective, but its growth is substantial and its positioning within the broadband connectivity industry is attractive.
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