Dividend disrupter aims to end the $9b wait
More than $9 billion of dividends from Australia’s two biggest companies are in a state of suspended animation until late next week, and Sam Wetzler reckons that’s a big opportunity.
By sheer coincidence, BHP and Commonwealth Bank both chose September 28 as the payment date for the $US4.1 billion ($5.12 billion) and $4 billion of final dividends they respectively declared back in August.
Billions of dollars of dividends pledged by other companies during the reporting season are also yet to be paid. New Hope Coal shareholders will wait until November 7 to get the $253 million of dividends they were promised earlier this week.
Sam Wetzler created financial services start-up Divvy Now. Peter Rae
“In this current day and age when everyone wants things right now and instant gratification, why do you have to wait six to eight weeks for a dividend payment,” asked Mr Wetzler, as he highlighted the two-month wait endured by Macquarie Group shareholders every time the bank declared a dividend.
“In the current high inflation, high interest rate environment, the time-value of money is as important as it has been in a very long time.
“So basically, I went out to try and solve that.”
Mr Wetzler’s answer was the financial services start-up Divvy Now Pty Ltd; a company that offers customers immediate payment of their dividend in exchange for a fee.
The mechanics of the idea involves Divvy Now taking security over the customer’s shares for the period between paying the customer an upfront sum, and the day after the dividend record date.
It’s akin to supply chain finance, but arguably with lower risk to Mr Wetzler, given companies like BHP and Commonwealth Bank tend not to renege on their dividend payment promises.
“The whole idea is very
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