Cardinal Energy Ltd (Alberta) T.CJ

Share buy backs

[Luckyguy777]

Why does nobody talk about the fact that every share buy back is a tax free way to increase your share position in the company.  Dividends are great but we have to pay 30-40% tax on those.  Share buybacks are free for the existing investor.

[divime1]

Not if you have them in a TFSA .

[Re1ndeer2]

Agree with 10% share buybacks, especially on dips.........Need to maintain Dividend plan as perCompany disclosure as it correlates to debt reduction....

[TheWokeLemming]

Got mine from my TFSA.   Free baby!   

[Luckyguy777]

I guess I got $1,500 of the divvy in my TFSA.  Free is always nice!

[JayBanks]

I'm not extreamly against share buybacks, but I do have a couple concerns on them despite the positives... Positives being: - shares have more potential value in that it increases your percentage of holding - less shares means the dividend is more sustainable in terms of cost to payout, also means payout can be increased to match the buyback percentage (ie if by the current maths .10/month

[JohnnyDoe]

share buybacks won't lower the cost to take the company out. Companies are bought based on a premium to market cap. If there's less shares out, theoretically they are each worth more. Buying back doesn't alter the market cap. It does lower the fcf needed to pay out dividends and increases the fcf/share

[JayBanks]

  Are you telling me that after the buyback should shares continue to trade in the $7.30-7.50 range that the market cap and cost to take the company out doesn't change? I understand in a perfect world that if it's 10% buyback that @ 7.30 the shares should increase in value .73 and become 8.03 thus not affecting the market cap value, but this is not a perfect world as as I point

[MadeInHeaven]

You all miss the point. If company buyback 10% in ideal scenario based on the same market cap price should go up 11.1% if 20% price up 25% if 30% buyback price should go up by 43% etc this is advantage over dividend that share price increase goes parabolic if company buys back 90 % of the shares price should be up 900%.

[Kontrary]

The operative word there is "should". If a company buys back its shares and doesn't just reissue them as stock grants to management and employees, then the total number of shares should go down and metrics like earnings or cash flow per share should go up. At that point, if the market continues to apply the same multiples to those metrics, then the stock price should go up.

[Luckyguy777]

Also happy with the balanced approach.  But, I look at FCF and see that current dividend return is way  less than FCF per share.  Doesnt it make sense to buy back a pile of shares?  Buy them back while they are cheap! This is a $12 - $15 per share company and if they can but back stock at $7 they should and I support that decision.

[JohnnyDoe]

I didn't miss that point at all. If you have a market cap 1b company with a 100m float, each share is 10 bucks. If they buy back 20m shares, and nothing has occurred at the macro level to alter the market cap, then each of the remaining shares is worth 12.50. However, if the same company was paying out 100m in dividends, a buck a share, it only costs 80m to pay out the buck a share. That makes

[TimeBuilder]

  JohnnyDoe - (7/18/2022 5:49:53 AM) Very WELL stated JD  ..totally agree.... We do not re invest our dividends here BUT use the cash to pay the Tax man. ;>((  Prefer the / a company buy back share plan to lower share float & pay a special Dividend only when Time is right....;>))      IMO as a very long term market Investor   Regards

[TheWokeLemming]

If you use your TFSA, no tax man to pay.   It's a beautiful thing.   Those shares bought at 7.12 Friday came for FREEEEEEEEEEEEE.

[TimeBuilder]

TWL   FYI .>>>>   Our TFSA's   are maxed out every year & we will continue to be so..Current returns are very very positive. Note that these accounts are the only ones that we DRIP   eg BTB.UN.T GLTY in ALL your future investments    TimeBuilder   PS: our current CJ shares are held in a CASH tradng account so we can