RE:RE:RE:RE:RE:buy back ALA had a debt problem. Their financing plans for the WGL buyout weren’t working out as planned and leverage was getting stretched. This could affect their investment grade rating, which would not be good for a utility that needs reliable access to cheap long-term bonds.
The div cut was a last resort. They have been taking other steps to reduce leverage as well but those take more time, time they did not have.
The situation here is very different. The capex has not been spent yet and can be adjusted as needed. DRIP monies also are available for capltal programs and reduce the need for debt financing. ALA kept their DRIP, dropping only the premium part of it.
Sure, the yeild raises flags, but they can’t change the div every time the price of oil changes. Market has a very short field of vision (day traders?). Management is looking at longer-term issues. That’s their job.
chigs1975 wrote: I agree with Spanito. The longer it goes with a 10%+ yield, the more clouds there will be. Cut the dividend now and get back to focusing on the business instead of having to answer questions about your dividend policy.
Look what happened to ALA after they cut their dividend.....