Listed companies are diluting their stock with a swag of bonus and rights issues, and paying fatter dividends as their profits rise side by side with the stock market.

The share rally that began in February has taken the VN-Index past 600, prompting listed companies to make the most of the sunny outlook.

Dry Cell and Storage Battery Co., Vietnam’s largest battery maker, is asking its shareholders for permission to issue four million bonus shares, a formality that usually takes several weeks.

The company, known as Pinaco (PAC), also intends to raise the final dividend by 25 percent after estimating its profit for the first three quarters at VND160 billion (US$9 million).

One the same track as Pinaco, Ben Tre Aquaproduct Import and Export Joint Stock Co. or Aquatex Ben Tre (ABT) in the Mekong Delta’s Ben Tre Province announced a one-for-five bonus issue two weeks ago.

With its profit for the first nine months exceeding the original target by 50 percent, the company is now aiming for more than VND100 billion in profit by the end of the year. By way of comparison, its registered capital is VND81 billion.

Can Tho-based Mekong Fisheries Joint Stock Co. (AAM), whose share price has almost doubled from the initial VND38,000 when it listed on the Ho Chi Minh Stock Exchange late last month, is also planning a bonus share issue, at a rate of three for ten.

As for dividends, seafood firms were having a rough time early this year but government-subsidized low-interest loans helped them recover to the extent that several of the big names are paying the highest third-quarter dividends of all.

Other firms are selling new shares to boost their capital, such as Hanoi-listed Sai Son Cement Joint Stock Co. (SCJ), which hopes to raise nearly VND50 billion through a rights issue.

This share dilution doesn’t always sit well with investors.

Take Ba Ria-Vung Tau-based Development Investment Construction Corp. (DIG) as a prime example.

In late September, the HCMC-listed company announced a rights issue of 10 million shares priced at up to VND100,000 and was promptly rewarded with a market sell-off that scared management into promising an extra 50 percent dividend payout for 2009.