However the propensity to distribution is not without risk

At the time where the results of our featured companies show strong growth of the free risk-taking, the question is what they will do these excess liquidity: investing them or distribute them to their shareholders Today, the majority of the groups opt for the distribution, reflection of a desire to nurture its shareholders by redistributing a part of its capital dividend. According Vernimmen, CAC 40 companies have distributed EUR 24 billion to shareholders in 2005 (an increase of more than 50 from 2004), and everything suggests that 2006 should experience strong growth again. Several reasons explain this propensity to the distribution of dividends on the part of companies.

First, the regular payment of dividends performs a function of information management through the ability of the company to identify the performance of cash (theory of the signal). Increase the dividend reflects the will of the direction to convince investors of the relevance of its development model. "The best of defences, it is our performance and the confidence of shareholders in its continuity," said Arcelor President after the level of the dividend. Second, the dividend remains a useful means of controlling the leaders, suspected of differences of interest with their shareholders, reducing the liquidity available to them (the Agency theory) for investors.

But if the main explanation, beyond theoretical arguments, was simply an effect of mode Observed as well as providing a good level of dividends are more valued than others. Investors currently prefer enterprises with low PER (price-earnings ratio) of which the results are solid and important dividends: banks, utilities, database products, building materials. However, they tend to move away from the values of growth (traditionally), as the TMT sector. This premium market companies distributing dividends led the leaders to be opportunism in the choice of their policy of distribution, for fear of having an undervalued stock exchange course. Pay dividends thus today a company to have an appreciation of his scholarship course. France Telecom saw its title to appreciate 3 on the day of the announcement of the distribution of 40-45 of its organic cash flow in dividends in the coming years.

However, the propensity to distribution is not without risk. Also at the point where growth prospects remain attractive, isn't worrying to see a company forego any possibility of future investment in reducing its cash flow and compromising to term the growth of its dividends By its generous distribution policy, the telephone operator course demonstrates its ability to generate the cash, but does not resolve its problems of growth so far. In addition, a thoughtless increase of the dividend may lead to erratic changes in downward revision, destabilize the investor and cause a decrease in stock market. Finally, when the company reduced the amount of its capital in distributing, it loses its flexibility of funding, because, at the first reversal of situation, it will have difficulties to raise capital on the market.

In summary, focusing on the dividend yield to retain the shareholder in him forgetting the added value for the benefit of the income, which reduces the volatility of the course. But the market will correct sooner or later this excessive valorisation. Indeed, many companies prefer self-financing in the distribution of dividends to develop cost-effective projects and advance scholarship course faster than average. In other words, bet that future stock performance are derived from values with previously distributed little dividends. It would be after all as a just return some efficiency of markets...