RE:RIOCAN just slashed it's dividend by 30%I had 30,000 shares when the news came out. My itital reaction was OH NO !!!!!! But after using this thing called a brain, I sat down and surmised that with the cut, they are putting the money in their pocket.. The shares havent appreciated very much in 5 years....... they were 24 in 2015.. They managed to get to 30 just before the pandemic started.. You either get dividends or capital appreciation with a company like this...... If they are paying out 100% of affo then the stock isnt going up, you will get good dividends but no appreciation of capital.. If you have a lower payout, the stock will tend to move higher over time because they are adding the other 35% they cut to their bank account. This adds to NAV and increases market cap over time.. The shares then go UP.....
Thats the reason they didnt tank with the news.. Sure you had a few that dumped, but people who understand this held or even bought more. Such as myself, I bought another 30k shares at $16.70 ish....... I then sold 40k the other day at $17.75 average.. I now have 20k for long term hold, back to $30+ ... when this is all over the stock could be $35, my average cost after buying back in again is $16.25. So far this year I have made over 100k on REI stock, not realizing what I am up right now...... So YES people realized they cut the dividend..... There are lots of companies out there that pay out 30% of their earnings in dividends, and have 2 or 3% yields.... and guess what? The stock goes up not flat.... That is also why you see stocks with 10% yields, market pros estimate they are paying out too much, and short the shares based on them losing market capital from the share price as they pay out 115% or whatever the overpayment might be..... This is why REI was over 8%, it was viewed as being vulnerable to a cut.. HR cut and the shares went up greatly since then.. with an even lower yield than REI.
Everything a company does to preserve itself should not be viewed as a negative, but rather as a positive, the dividend will come back in time, and in the meantime you can view a safe 5.5% as better than a risky 8.5%...... Now is the time to buy, they are getting debt issued at under 2%.. risky companies do not get rates like this, they have to pay 7 or 8%. With low rates, property values are going to go up greatly in the spring when we come out of this, NAV for REI will be over $30 in a year.
mmjgaadzilla wrote:
Do people even know...