Incitec Pivot Ltd T.IPL

RE:The Premium Dividend program competes against us

[Sadie222]

Heartland is a big project, with attendant risk. It’s going to drag things down until the financing is derisked. Ask ALA how that worked out for them. Selling the storage would be a good step in that direction.

The DRIP money not spent on divs stays in the bank, and goes toward Heartland costs. It’s part of their financing plans for the project. The new shares you see go to the shareholders DRIPing.

flanter wrote: I have been under the impression that the reason that the company shares were performing so poorly was due to the lack of transparency offered by management.  After taking a lead from roberto's excellent post, I did a bit of digging to the best of my limited ability.

According to the 2019 financial statements, IPL issued $359 million of new stock during the year via the DRIP or the Dividend Premium program. 

Tthe DRIP doesn't offer a discount while the Premium Dividend program offers a 3% discount.  A bit of a no brainer as to which option to choose.  The comany uses the $359 million not spent on the dividends to create new shares which it sells into the open market in order to pay a 1% premium above the cash dividend. 

Dividing $359 million by roughly $20 per share means that about 18 million new shares may have been created and sold into the market. 

The market is open about 240 days per year, so dividing 18 million shares by 240 means the company sells an average of 75,000 shares into the market every day.

When I look at the average volume of trades over the last 30 days, the 75,000 shares doesn't seem like a big deal.  When you eliminate day trading and algo whatever it is trading, the 75,000 shares of real selling that requires people to actually write a cheque for $1.5 million per day suddenly seems like a much bigger factor. 

If the funds managers are buying, $1.5 million per day of buying on average is probably not a big deal.  But the funds shy away from uncertainty caused by projects like Heartland, leaving the buying up to investors like us that actually believe in the company . 

I see the similarity between the IPL Heartland experience and the ENB Spectra experience.  When IPL finally stops jamming 75,000 shares per day down our throats, I think we will see the share price flourish.  I just have to figure out when to buy.

#  grinding for another year