Don't expect a div increase This is great news for CHR, as obviously appreciated in the 28% jump in the stock stock. But I don't think they will raise the dividend again, because:
- they have $77 million in expensive converts which are callable in 2014. They are paying 9% on these, and will want to use cash to redeem them (as they suggested on an earlier conference call).
- the press release today only says that they are committed to maintaining the current $0.30 dividend, they could have said it was under review (if in fact it was).
- back in the summer, after cutting the dividend, they bought back stock (great timing as it turns out). I think they will prefer to do this periodically, rather than risk having to re-cut a high dividend down the road.
- the CPA negotiations start again next year, so certaintly of cash flows are only for another 13 months.
Without the prospects for a dividend hike, I think the stock is now fully valued. Note that the Canaccord analyst has already today reiterated a SELL rating and a $1.50 target.