One of the criticisms levelled at National’s policy to sell minority shares in a few energy companies was that the state would then lose the dividend payments.
But Dene Mackenzie points out that the returns from the four companies which might be sold were lacklustre:
Politicians continue to misinterpret the returns by focusing on the return on capital employed (ROCE) instead of looking at the amount of cash generated from the dividends.
While some of the state-owned enterprises provide a large dividend payment to the Government in dollar value, the dividend yield is well below the industry average.
One of the arguments for partial sales is that it will improve company performance. The figures Mackenzie uses show there is room for that.