RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Dividend Interpretation?TickerTwit,
I get the frustration of waiting in a holding patern - but that is the nature of niche market deal making. It's not like these royalties just exist out there in a market and you can just go out and buy them - they have to be crafted with the selller where structure and timing both have to align to make a good deal. The fact that the board continues to approve the monthly dividend should be taken as a signal that a deal is close.
The dividend funding situation is very well understood by most of the market and I dont think most traders were expecting any sort of deal annoucement last night. The reason shares are down somewhat this morning despite outstanding SSG performance at Mr. Lube is because costs came in a bit higher than expected.
TickerTwit wrote: I agree that doing a deal when at a disadvantage is undesirable. But they have to keep looking. They can't shut their eyes and let SME evolve unseen. Everything I have heard and read about DIV management says they are good, and I will assume they keep eyes and ears on SME prospects non-stop. But twenty months ... opportunities must be slim, and we're mulling this over now.
If a dividend cut (to a covered level) had been announced yesterday, we would be happy despite the capital loss and would be planning to add in large volume. If a new royalty had been announced, we would be even happier and also planning to add. But this holding pattern is a problem.
An alternative to the holding pattern is to reset to the reduced royalty situation. (1) Issue a special dividend, perhaps 0.05/share, to return the bulk of capital from the Franworks proceeds. (2) Cut the regular dividend to a covered level. The amount of the special dividend would cover most of the share price loss after it resets to the new dividend. Maybe all of the loss actually, possibly more, since the royalty income would be re-risked upon reset and the market would no longer discount the shares to the degree they are today.
The alternative above is a shorter-term parallel of what happens if DIV finds no new royalty and the $75M is leaked out as a slow capital return via the regular dividend and the dividend is cut at some later date. But the associated share-price reset means that it will be more difficult for DIV to regrow.
My bias is that I am strongly averse to extension of uncertainty, so consider my posts accordingly. DIV has been our favourite stock for a while now and still is.
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nedstar71 wrote: Redo: Best to not include any time when oil was sub $50 with Franworks ownership or the share price of DIV was below $2.35. Without the ability to finance or cash in the bank any discussion with royalty partners during those periods would have been like a homeless person going to a car dealership to inquire about a new Cadillac. Ie don't waste their time or go out of your way to look like schmucks.