Dividends and Jamal Khashoggi

The death of Jamal Khashoggi in Turkey by agents of Saudi Arabia around October 17th allowed many issues to come to foreground/ Mr. Khashooggi was a member of the Muslim Brotherhood who would like to see more democracy in the Arab States, the present rulers of the Kingdom of Saudi Arabia do not. There is a religious component and for investors there is an economic part. It is easier to comment on the economic aspect – a few years the leader of Saudi Arabia announced great plans to transform the country from receiving 95% of its revenues from oil to great diversification. In keeping with this vision – the state oil company Saudi Aramco was going to go public. Besides the biggest IPO or initial public offering in the world, the company is one of the most profitable companies in the world and institutions and individuals would love to buy the shares. Prince Moammed bin Salman (MBS) decided to cancel the IPO and investment bankers and the financial markets were not happy. However, Saudi Arabia still has lots of oil and as long as they have money, the hurt feelings would go away.

Linking to dividend paying stocks, the hurt feelings and large bonus cheques of the investment bankers were seeing caused many to cancel going to a Saudi conference. Next year, they will all be back. With a dividend stock, often there are other issues going on it which the company becomes part of. It may or may not be a major player but international issues come forth. Remember the reasons why you bought the company and as long as it continues to make money, issues will pass into the background. All companies have to face some level of criticism. How they do it is whether you keep the stock or look for alternatives.

There are more questions than answers, till the next time – to raising questions.


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