STUDENT TRANSPORTATION INC 5.25 PCT DEBS T.STB.DB.A

Analyzing The Financial Reports

[goldsternp]

Could be that STB’s management hides compromising information in their financial reports, but not how they cover dividends payments.  
 
It is quite clear in the financial reports, yet is so difficult for our sophisticated analysts to comprehend, that:
 
1.     STB pays its dividends out of cash flow, which more than covers the dividends.
2.     STB pays for growth with debt, new equity, and/or leasing.
 
For some reason, analysts insist on telling us that growth is financed internally and that therefore, debt and dilution is paying the dividend. That sounds horrible but it is wrong because debt and dilution are paying for growth while distributions come from operations. REITs work this way.
 
I assume the company expects growth to offer economies of scale that will be profitable for existing shareholders while compensating investors who fund the growth. So far, the former isn’t obvious but there hasn’t been any dilution either.
 
I think it is an investment con to string along investors, with promises of potential, future capital gains, while management pulls in fat salaries today.  STB pays today’s investors today and does not offer dreams of fat gains, which may never materialize, somewhere far off in the future.