daveh wrote:Dod101 wrote:
It is increasing the size of the pie and at the same time reducing your holding in the company. You do not notice that probably because they are buying earnings accretive assets so that they can maintain or even increase their dividend notwithstanding the extra mouths to feed. In the event of a winding up of the company your share of the assets would be reduced.
But it would be a smaller share of more assets. If the company is investing the new capital wisely it shouldn't be a problem. You'd get a smaller % of a bigger pie and if the company is doing its job your actual piece of pie should be larger.
If you want to see the sometimes effect of dilution just take a look at the dividend record of Phoenix Holdings. They have sprayed new shares around for first the takeover of Standard Life and then Reassure. The result is that they have increased the divided as a cost to the Company but the dividend per share has been static for two or three years. beware complacency in the issue of share placings.