August 2016 dividend income report and the upcoming SABMiller vote

Just three weeks ago I wrote the July 2016 dividend income post and here we already have the August report as none of my stocks pay out a dividend in the second half of this month.

August 2016 dividend income
Here’s a peek at all the dividends I received this month:

• Colgate-Palmolive: 3.47EUR
• YUM Brands!: 3.85EUR
• Kinder Morgan: 4.31EUR
• Omega Healthcare Investors: 8.35EUR
• SABMiller: 12.10EUR
• Novo Nordisk: 7.53EUR

Adding it all up results in dividend income of 39.61EUR for August, this breaks my streak of triple-figure monthly dividend incomes and is well below my typical monthly average. As usual on this blog, all dividend figures are after-taxes.

This month featured the first interim dividend from Novo Nordisk and presumably the very last dividend from SABMiller.

Upcoming SABMiller vote
Shareholders of SABMiller will vote on the proposed takeover by AB InBev on September 28, 2016. As ruled by a UK court earlier today, the shareholders will be split into two classes; one class for Altria and BevCo, and one class for all other SABMiller shareholders.

If all goes well, the deal is expected to be finalized on October 10, 2016. Some minority shareholders were displeased with the financials of the deal, which is one of the reasons why SABMiller pushed for the two voting classes.

Combined, tobacco group Altria and BevCo (the Colombian Santo Domingo family) control 41 percent of SABMiller shares. The Altria/BevCo approval is basically a done deal so all that’s left is getting 75 percent approval from the remaining 59 percent of the SABMiller shareholders. Due to the creation of the two share classes for the merger vote, this effectively means approval will be required from 85.25 percent of SABMiller’s shareholder base, which should quell disputes.

The hurdle becomes a bit more difficult but consensus is the deal will receive the OK. Some minority shareholders are a bit disgruntled though as Altria and BevCo are getting the better deal. Almost a year ago, when AB InBev made its SABMiller takeover offer public, the company proposed a cash offer as well as a partial share offer. The latter is designed for Altria and BevCo, it allows these two parties to keep holding a stake in the new company and removes worries about capital gains taxes.

When the deal was made public, the partial share offer was valued about 10 percent lower than the all-cash offer, so no one really made a fuzz about this. This changed however, as the value of AB InBev’s stock appreciated and as the British pound fell in value after the Brexit approval. AB InBev recently raised its all-cash offer to £45 per share — but at the moment the partial share offer is worth £51.20 per share.

It’s a substantial difference but most SABMiller shareholders, like the institutional holders, will be unwilling to opt for the partial share offer (which is limited to a maximum number of shares) because it comes with a five-year lockup that prevents selling. For a dividend growth investor, this doesn’t sound that bad though.