RE:RE:RE:RE:RE:RE:CC: Alex Gave GOOD COLOR On NCIB EXECUTION Strategy !!!???!!For some investors that are holding Cenovus shares in registered accounts the tax treatment is the same. Either the full rate on funds as they are removed from RRSPs or zero (for now) if they are left or redeployed in their RRSP or held in a TFSA.
For those income earners invested, a dividend lets them withdraw that steady income while still enjoying no reduction in their equity nest egg. While capital gains would let them pay less in taxes (roughly their nominal rate on 16% or so) the chore of trying to decide how many shares per year to sell (combined with the unpalatable task of trying to decide how long they migght live) just may not be worth the tax savings to them.
For investors that have seen oil booms come and go, a bird in the hand is worth two in the bush.
For them I would say rest easy in knowing that shareholder returns in the form of dividends cannot be that far off anyway as when the net debt level is reduced to $4B this year, buybacks of over 100 million shares will make the share price rise well past the $30 CAD upper limit that AP has placed on them and special dividends are his stated method of shareholder returns.
You can have your cake and eat it too.
GLTA
mrbb wrote: let me explain that in one sentence.
I much rather have more capital gain and than more dividend because i'd pay less income taxes. Dividend campers prefer the pay (taxes) as you go plan, less painful i guess,
MaynaardKeanes wrote:
That's a fair short term view, but probably not in the best interest of long term ownership.
I prefer that they actually cut the dividend or best case just keep as is. If the dividend goes up, the stock price will go up and owners like us will just pay billions more on the NCIB.
If we strategically keep the dividend low It will discourage dividend type people from buying the stock bring the price down so we can buy the company back cheaper. When we are talking billion shares , 5 or 6 dollars a share saves us $5-6 billion ! We will get all that back afterwards and much more than we ever would if we compromised just for a small dividenD bump now
Once the company has bought back a great amount of the stock , a dividend of 4 to 6 dollars per year will be easily attainable and then the stock will rise to at least $60 If not more
Again if you want a dividenD that's how I go to another oil company as there's plenty of them paying good ones I'll probably still go up when oil goes up. This one's a different animal