TSX:KEG.UN - Post by User
Post by
logicandinertiaon Oct 13, 2020 5:47pm
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Post# 31711360
Distribution increased 43%
Distribution increased 43%Keg bumped dividend by 43% to $0.60 per annum for next three months, despite Covid-related closures in Quebec and Ontario just reinstituted. So this brings the distribution to 52% of the level prior to Covid-19 shutting things down.
Stated that "should a surplus in cash arise over next three months, as a result of royalty fee income exceeding current expectations, a special distribution will be declared in December 2020 to resolve that issue."
Spoke to customers being "supportive", yet cautioned that Covid related closures offset that for the near-term.
At current level, the bump takes yield to 7.7% based on today's close.
DOn't really own this thing because of next three months, but encouraging bump. Keg's stability and market position within CDN market makes it a survivor. And the landscape should be well consolidated by mid-2021.
My own assumptions: assume that post Covid, Keg can get back to 80% of pre-Covid run rate levels by latter 2021, that would mean $0.92 in run rate distributions and at a 7% yield, a $13.15 unit price by Year end 2021. A 68% capital return from current level and 7-10% in distribution yields, for 15 month return of 75-78%.
Good luck.