TSX:SGR.UN - Post by User
Comment by
sclardaon Jan 06, 2021 7:36pm
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Post# 32239018
RE:Dividend cut
RE:Dividend cut2young2invest wrote
Their AFFO payout >100% for the last 3 quarters.
Am I the only one expecting dividend cut, especially after more shares were issued?
Maybe groceries are doing fine, but all those small restaurants and barbershops around it are struggling for sure.
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In the first three quarters they brought in $26.748 million in AFFO and payed out $27.261 million in distributions. They payed out $513 thousand dollars more than they took in.
On an annulized basis if things stay around the same they will bring in aprox. $35.660 million and pay out aprox. $36.400 million dollars. They will be paying out aprox. $740 thousand more than they take in. In the second quarter they recieved 89% of contracted rent and 95% in the third quarter. By my calculations that equals aprox. $4.5 million in rent that was not recieved. If they had recieved that rent they would be around a 90% payout ratio.
The distribution on the new units issued will cost aprox. $5.4 million per year. So overall they will now be paying out over $6 million in distributions than they are taking in. The money from the private placement will be used to purchase new properties which will pay for the increased dividends from the new shares issued.
So in short to answer your question they can pay the distribution in the short term until new properties are acquired. The bigger question is should they? The income from the eventual new store purchases will cover the dividend but the payout ratio will still likely be quite high. dividend cut of aprox. 15% would save this company aprox. $5 million per year and bring the payout ratio into the 80 to 85% range while still leaving a yield of aprox. 8% at todays shareprices.
Not that i want them to as i like my nice distribution but a small cut probably isnt a bad idea and gives the company a little bit of surplus cash and breathing room.