RE: RE: RE: Support The market will look to the NAV of the ETF for guidance...arbitragers would quickly jump at any price discrepancies and the ETF manager himself would do whatever possible to close the gap between the NAV and the market value at the end of the trading day by purchasing and releasing shares into the open market (also depends on whether it is closed or open ended ETF).
The point he is making is that in the end, COS can reduce their dividend to 2% to "bring it in line" with the rest of the industry. This would just mean that the NAV equivalent would rise leading to a higher value of the company. Either COS holds the money or gives it back to shareholders. The fact that they pay a yield of 7% while the stock has been flat just means that you are paying dividend taxes as opposed to capital gain taxes. If COS managemnt can't do anything creative with that money to generate a better ROE than you could garner a ROI, why hang on to it and reduce the dividend to 2% yield, unless they felt they were not going to be able to meet cash flow requirements. They have budged for $80 and a utilization rate of 0.83 (which is relatively conservative) and deemed that their dividend is safe. Slashing it at this point would send the wrong signal to the market (that they no longer feel they can make their cash flow requirements)...the share price would tank temporarily, but resurface as people gained more confidence that they weren't wasting the money that they were hanging onto. Personally, I would rather have the money vs allow COS to manage it...Marcel Coutu isn't Warren Buffett.
Good thing you aren't running the company Thim...