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A total of 36 listed companies failed to declare any dividend for shareholders for the year that ended on June 30, 2017 and December 31, 2016 due to their low income, according to data from the Dhaka Stock Exchange (DSE).
However, share prices of many of them soared more than double year-on-year in 2017 despite having no dividend declaration and no price sensitive information or expansion plans. Only 10 companies' share prices declined during the year.
The companies which failed to pay dividend are Kay & Que, Golden Son, Shurwid Industries, Bangas, Zeal Bangla Sugar Mills, Shympur Sugar Mills, Rahima Food Corporation, Meghna Pet Industries, Meghna Condensed Milk, BD Welding Electrodes, Jute Spinners, Dulamia Cotton Spinning Mills, Tallu Spinning Mills, Mithun Knitting & Dyeing, Sonargaon Textile, Alltex Industries, The Dacca Dyeing & Manufacturing, Beximco Synthetics and Hakkani Pulp & Paper Mills.
Khulna Printing & Packaging, Aramit Cement, Information Services Network, Samata Leather Complex, Standard Ceramic Industries, Shinepukur Ceramics, Janata Insurance, Sunlife Insurance Company, Bangladesh Services, Savar Refractories and Sinobangla Industries failed to pay dividend for the year ended on June 30, 2017.
ICB Islamic Bank, Midas Financing, Peoples Leasing & Financial Services, Prime Finance & Investment and Bangladesh Industrial Finance Corporation (BIFC) also failed to pay dividend for the year ended on December 31, 2016, the DSE data shows.
Of them, 10 companies -- ICB Islamic Bank, Savar Refractories, Zeal Bangla Sugar Mills, Shympur Sugar Mills, Rahima Food, Meghna Pet, Meghna Condensed Milk, Jute Spinners, Dulamia Cotton and Samata Leather did not declare dividend over the years. But their share prices rose up to 194 per cent during the year.
Share price of Dulamia Cotton jumped more than 194 per cent year-on-year to close at Tk 26.50 on Thursday, the last trading day of the year, though the company failed to pay dividend over the years.
Savar Refractories' share price also soared 194 per cent to close at Tk 148.30 on Thursday last despite no declaration of dividend over the years.
The state-run Shympur Sugar Mills' share price also jumped 131 per cent to close at 63.60. The company also failed to pay dividend over the years.
Share prices of Standard Ceramic also rose 107 per cent to close at Tk 109.80 despite the company declared no dividend.
Share prices of Imam Button and Jute Spinners also jumped 89 per cent each year-on-year to close at Tk 35.60 and Tk 103.30 respectively on Thursday last.
Samata Leather's share price soared 86 per cent year-on-year to close at Tk 63.30 while share prices of Sinobangla jumped 81 per cent to close at Tk 52.60 on Thursday last.
Share price of Meghna Pet rose 80 per cent to close at Tk 18.20, followed by BD Welding 79 per cent to close at Tk 24, Bangas 70 per cent to close at Tk 175.50, Information Services gained 62 per cent to close at Tk 23.20 and Meghna Condensed Milk 59 per cent to close at Tk 20.20 and Shinepukur gained 54 per cent to close at Tk 17 on Thursday last.
"Though the companies did not declare any dividend, the price hike of these companies during the year is unusual," said an analyst at a leading brokerage firm, on condition of anonymity.
He noted that the abnormal price hike of these companies reflects that investors were not investing diligently. "It shows investors' lack of awareness."
The number of dividend declaration in the form of cash also declined in 2017 compared to 2016 as 175 companies declared cash dividends between 2.0 per cent and 775 per cent for shareholders in 2017.
In 2016, 191 listed companies declared cash dividends between 3.0 per cent and 650 per cent for shareholders, the DSE data shows.
"Dividend in cash is an indicator of the financial strength of a company. It is a strong fundamental indicator of the operating performance of a company," said another analyst.
He noted that it also indicates financial flexibility. A healthy cash dividend payout also indicates the management's willingness to share profits with the investors.