2% Yield & More to ComeI personally do like to see dividends being paid, I would prefer they buy back stock or royalties.
Dividend cost is very small $1.7 to $2.5 Mil fully diluted.
Buying back shares provides a higher rate of return to AAB shareholders.
But this is also about closing the gap between market price and NAV and getting wider market participation into AAB shares.
AAB is now yielding 2% and is competing with bank rates and other dividend stocks.
In general the correct decision is to pay a dividend and try to increase it each year even if AAB has to take on some debt to pay the dividend.
This telegraphs to the market that AAB is serious about returning capital to shareholders and helps AAB build market credibility as a Merchant Bank.
AAB will get broader market support from pension funds looking for dividend yield. Pension funds can also assist getting the warrants exercised as they are long term holders.
AAB is very undervalued and a good hold in an RRSP were the dividend is tax free.
Lots of upside value is already locked in to that companies that AAB hold.
Probably the best portfolio play AAB has is Longford; it is very under priced in the market; given they have a huge shallow oil reserves that are relatively cheap to drill and produce. Many look at VAST and apply the same drilling matrix; but LFD is 100% opposite of VAST.
Lots of upside in AAB and AAB.wt; but especially Longford.