TSX:SRV.UN - Post by User
Comment by
BlueJay2020on Sep 13, 2021 1:49pm
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Post# 33849300
RE:RE:RE:If you bought at $1.50...
RE:RE:RE:If you bought at $1.50...Each to their own!
The SP was about $9.15 pre- the 28% dividend bump. It's up about 15% as I type since then, which I don't find extraordinary at all given that the SP for this type of stock is so tightly tied to the level of distribution.
Assuming the current distribution level of $1.08 represents 100% of earnings (which a restaurant royalty stock should roughly be over the long-term) that implies an earnings multiple of less than 10. That's by no means out of whack. And I have already said why I think material downside to the distribution is not a huge risk.
I still see 25% upside to SP from here, but it's quite understandable for dabblers to take the money and run at this point. A small position inherently communicates a lack of confidence in the stock - irrespective of what the SP is.
nedstar71 wrote: The action this is getting from that dividend bump is truly extraordinary. I didn't get in that low but did just sell the small position I had. To me upside is limited and I find it difficult to know what the actual sustainable dividend will be going forward. I fear less than stellar quarterly results may put some pressure on. Good luck all!