Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 479

Peer Group Approach: Aracruz

Group

Dividend

Yield

Dividend

Payout

Latin America 2. 86 % 41. 34 %

Emerging

Market 2. 03 % 22. 16 %

US 1. 14 % 28. 82 %

All paper and

pulp 1. 75 % 34. 55 %

Aracruz 3. 00 % 37. 41 %

Aracruz pays dividends that are similar to other Latin American paper and pulp

companies but much higher dividends than paper companies elsewhere in the

world. This may be the price paid by voting shareholders in the company to

maintain their voting privileges. (At most Brazilian companies, the failure to pay

a mandated ratio (35% generally) can lead to non-voting shares being granted

voting rights).