Martin Lee @ Sg
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Another MIIF Scrip Dividend Strategy

It’s that time of the year again when Macquarie International Infrastructure Fund (MIIF) pays out their dividends. About half a year ago, I wrote two lengthy articles on my approach towards the MIIF scrip dividends (or any other scrip dividend scheme for that matter).

MIIF Scrip Dividend

More on MIIF Scrip Dividend

Fast forward six months, the price of MIIF had dropped to historical lows. It reached as low as $0.66 recently. The half-yearly dividend payout for this round is 4.25 cents/share and the scrip dividend pricing was at $0.70.

What this meant was that if someone had 100,000 shares, he could opt to receive either $4250 in cash or 6061 shares. Previously, it was a all-or-nothing either cash or shares option.

Macquarie had just improved their scheme whereby a person can opt for part cash and part scrip. This helps to avoid the problem of odd lots.

Being an owner of some Macquarie International Infrastructure Fund shares, I had originally intended to opt for scrip this time round. After all, at a price of $0.70, the dividend yield (based on 4.25 cents for 6 months) works out to be about 12.1% p.a.

Then it stuck me. As I looked at the live prices of MIIF two days ago and saw that it was trading below $0.70, I thought to myself:

Instead of getting scrip at $0.70/share, shouldn’t I just buy the shares from the open market at a price less than $0.70 and opt for the cash dividend instead?

If I can buy at $0.66, that works out to be a savings of $0.04/share.

Theoretically, all these sounds nice and good. However, in reality, you have to take into account things like brokerage fees, CDP fees, etc. Therefore, it might not work so well for someone with very few lots.

For example, a person holding 16,000 shares could get a dividend of $680, or 971 shares if he opts for scrip dividend. If he can opts for cash dividend and buys MIIF at $0.66, he ends up with 1000 shares and $20. However add in the fees and the $20 will become negative $10.

It’s still worthwhile compared to getting scrip as his overall cost would be $0.69/share instead of $0.70. A savings of $10 based on 1000 shares. 🙂 If he makes use of the opportunity to further increase his holdings, then the marginal cost of acquiring that 1000 shares would be even lower.

At the other extreme, our 100,000 guy would have been easily better off by about $200 if he can buy MIIF on the open market at $0.66 instead of getting the scrip dividend.

Sometimes, it pays to stay vigilant and look out for opportunities no matter how bad current market conditions are. Usually, it is when there is extreme pessimism in the markets that you can find great opportunities.

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Sean says 11 years ago

Wow in that case, it does seem like a real bargin at this price of 44cts. Don’t know why its share price has been crushed so badly.

Sean says 11 years ago

Well, do hope that doesn’t happen. Does it mean we will get back the NTA price per share should the fund be discountinued? Do you happen to know what the NTA is?

Also, does the share price in any way affect how much dividends we will get? Now that the current price is like 44cts.. if the dividends percentage remains at 10%, will we be getting like 4.4 cts per year?

    lioninvestor says 11 years ago

    Based on the last quarterly report for the period ended June 08, MIIF has net assets of $1.25/share.

    If the income and cash flow do not change, they should be able to maintain the current payout of 4.25cents every half yearly. The market price has no bearing on it.

Sean says 11 years ago

Hi, if Macquaire really goes bust, I really want to know your opinion on how MIIF will be affected.

    lioninvestor says 11 years ago

    My personal opinion of the worst case scenario is that they will wind up MIIF, sell off the assets and return proceeds to unit holders.

    Another scenario is that someone will buy over.

lioninvestor says 12 years ago


In the worst case scenario where Macquaire Bank fails, how will it affect MIIF?

lc says 12 years ago

Hi, given the conditions of Macq Bank now, is it advisable to hold MIIF?

lioninvestor says 12 years ago

Hi Andrew,

While both these give good dividends, they are definitely quite different in nature.

MIIF holds solid infrastruture assets while Babcock has a few different classses of investments, some of which can be difficult to value.

MIIF has been sold down quite badly recently due to concerns over its parent. The question to ask yourself (for the worst case scenario) is if the parent goes bust, how will it impact MIIF?

In the event that MIIF has to close down, what will you get back?

If you can take a strong conviction on that, you will know whether to buy, sell or do nothing at current prices.

andrew says 12 years ago

miif and babcock brown seem to be of same nature, but it is abit worrysome that babcok brown are not so sound theseday in view of the plunging share price ….will any of these be the next victim like what we see in wall street.

i am also holding these 2 counter.

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