OTCQX:GXOCF - Post by User
Comment by
HansProPickson Aug 10, 2018 11:05am
245 Views
Post# 28440585
RE:RE:RE:RE:Cash flow per share up 50% from Q1
RE:RE:RE:RE:Cash flow per share up 50% from Q1Do I think a 11% dividend is sustainable?
I find it interesting that most pundits echo the same thing, that if a dividend is above say 6%, that there's something wrong with the company. I've been around for a while, when a dividend of 12% could be had (yest market rates for GIC's were 8% at the time, so my point is that everything is relative. 11% dividends can be sustainable depending on the cash flow and business prospects for the company.
For GXO, the financials look horrible. Predicting a slight drop in production which wouldn't be an issue with $65-70 USD oil, except hedges and WTI discounts are killing them. The best move for the company would be to kill the dividend completely and just pay debt, perhaps expand production so that new production isn't hedged etc. INsiders own a lot of the company so that likely explains why they didn't divert the dividend when it was fashionable to do so. TOG, SGY, WCP all cut about a year ago, and their stock prices have recovered nicely relative to GXO. With the high dividend it also closes that option for reducing debt. How can you issue shares on an oil rally when they cost 10% or more? So I'm in agreement with others here, it's toast.
On a different note, there's a different play that I really like. Tech based cannabis play that just listed in July. MTEC. Thank me later. (no license risk, no US risk, yet all the cannabis upside because of the nature of their business). GLTA