Pinned

Zara Founder’s $3.7 Billion Dividend Lesson

Today, I read a Bloomberg article about Inditex SA (see here) that interested me. Inditex, which owns retailers, including fast-fashion juggernaut Zara, was founded by Amancio Ortega sixty years ago. The company is publicly traded, but he owns more than 59% of its shares, according to the article. Ortega is the fifteenth-wealthiest person in the world, according to the Bloomberg Billionaires Index, and has a net worth of around $126 billion as of this writing.

The article I read caught my attention because of the dividend Inditex is about to pay to shareholders, including Ortega. Based on the number of shares he owns, Ortega will receive $3.7 billion. I assume the dividend is based on the prior year’s financial results.

This article highlights that selling your company isn’t the only way to generate cash, even outsize wealth, for yourself. If you build an amazing company that generates a ton of cash, you can maintain your ownership in it, which increases your wealth, and receive dividends (or distributions) from it, which provides cash flow that you can use to pay living expenses or invest in other assets.

Building to sell is popular, but building to hold forever is how many of the world’s wealthiest people created their wealth.

Connected Entrepreneurs
No items found.
Connected Books
No items found.