Lithuanian companies grow out of habit of paying dividends

“The companies have learnt during the crisis that it is always worthwhile to have a certain stock of funds, which may be needed if the situation gets worse all of a sudden. Therefore they have adopted a moderate, conservative approach toward the future in particular as some news coming from large markets is not that good. It is easy to give money out but difficult to earn,” Kęstutis Celiešius, head of brokerage unit at the Lithuanian branch of Danske bank, told the daily.

According to Vytautas Plunksnis, chairman of the board of the Lithuanian Investors’ Association, companies’ intentions to pay dividends showed both the profitability and stability of their operations and proved that the key shareholders were ready to share the profits with minority shareholders. For example, Teo LT or Lietuvos Dujos (Lithuanian Gas) book significant profits regularly and do not implement any larger-scale investment projects now, so they share the money with small shareholders.

In Plunksnis’ opinion, experience has shown that another difference between the dividend policy of private and state-owned companies relates with the fact that the proposals put forward to the shareholders’ meetings by private companies' boards are adopted by the general shareholders’ meeting in most cases, whereas the decisions by state-owned companies often change in the very last moment hence such companies may decide to pay larger or smaller dividends, or to forgo the dividends altogether, or vice versa.

This was last proved by the shareholders’ meetings of Lesto and Litgrid last week.