Exit by billions in dividends

The recent opportunity in the dividend stripping trade on being long Fortescue (FMG:ASX) was one of the more obvious in the Aussie market in quite a while.

As I wrote (cryptically) a couple weeks ago, that the stock has long-term downside risk and

once it trades ex-dividend the stock will likely see more weakness.

Records profits are terrific as are record dividend payments, but from the page of ‘knowing how the world operates’, I believe that for reasons of confidence, Dr Forrest can never be seen selling any of his FMG shares and so I think his strategy is to either pledge or gift them to other entities and drag as much of his net worth out via dividend distributions.

Over the past 3 years, ~ $7.5 billion has moved his general way courtesy of dividend payments. That may account for a third of his net worth.

If I could get another $7 billion out in the next 3 years, I’d be quite happy with that parachute move.

Don’t get me wrong, it’s brilliant.

August 30, 2021

by Rob Zdravevski

rob@karriasset.com.au

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