Dividend won't be cutJust because the short sellers have beaten down the stock doesn't mean the company will cut the dividend. Here's my 5 top reasons why they won't cut:
1. No pressure on debt. S&P and DBRS both reaffirmed the company's debt ratings in March (post Trader announcement) and have "stable" outlooks on the company.
2. The cash position is so strong that the company did NOT have to wait to close the Trader sale to start buying back shares, as many had speculated.
3. The company is buying back the maximum amount of common shares daily since the buyback began. If a cut was being considered they would save their buying power until after the announcement and subsequent price drop.
4. They are buying back shares at a lower price than expected, so will be even more accretive to earnings per share than originally anticipated by management. (stock is down >10% since just before buyback was announced)
5. The CFO sold shares in May. Unless he wants to go to jail, he wouldn't sell while the company is considering a change to the dividend policy.