RE:My view
Nice summary. It would be nice if it followed this logical path in the future. High yields are caution ahead signs not go signs.
I saw a similar post on Aimia last year about the high yield for the common and the preferred shares. What a bargain we were told. Lots of cash flow even if Air Canada was bailing. The numbers looked fine to cover the dividends. Can't miss. Just collect the dividends on both and wait for the shares to recover and the market to realize they were fine and the dividends were safe. Aimia then shocked the market terminating all dividends so it can happen if they get squeezed by their banks as their core business erodes.
Who's to say with all the problems EFN is having rolling out it's strategy that they lose more customers than they gain so it's now about their reputation as well and those customers they lost won't be back and their reputation has been tainted.
I'm not looking at present numbers for EFN. I'm looking at what the forward thinking market sees. The stock is way down because the very smart money knows what may happen and don't like this magagement or their current strategy. They need a great CEO with a vision that will get confidence back and then they have to perform.
They have 380 million shares outstanding and a 30 cent annual dividend so that alone is $114 million dollars a year on common shares. Could that money be put to better use paying down debt. Definitely. That actually would be seen as a positive. Not by yield chasers of course. They would sell and new investors would enter on a value play similar to what happened to Aimia.
In 2015 the share price was $16.00. (Aimia by the way was $14.00.... now $1.60) EFN is under $4 now and very close to ECN. No one would forsee that hapening.
In conclusion, the risk is extremely high and if investors are comfortable with possible new shocks then good luck to them. They know the risk/reward and shouldn't be surprised by any new negative announcements.