RE:RE:RE:Up 5% Monday
DanielDarden123 wrote: At this price level a distribution increase would be disappointing as the yield is already >12%. IMO, a company should not do an increase unless it believes that it will be rewarded by the market. At 12%+, some investors associate risk without examining the actual risk or lack thereof. Improving the balance sheet or making accretive acquisitions would be more prudent until more investors understand the fundamentals and move the price up at least 20%.
You should never become a pawn to the market to increase your share price nor make your capital allocation decisions based on it. The only market they need to care about is the debt market. The capital allocation decision process should be:
1) ensure enough working capital
2) ensure you aren't over leveraged and have a good credit rating (important for REITS)
3) after the first two are good, select the highest return of investment from the following, in no particular order:
a) buybacks, either an NCIB or SIB if shares are cheap;
b) reinvest in the business for growth;
c) pay of debt if the cost of debt exceeds a and b; or
d) pay a dividend if you can't find a good opportunity inside the business.
The only place the price of your stock comes into play is should you do buybacks or not. A low stock price is actually better for investors because:
1) buybacks are more effective
2) it allows you to recycle your dividends at a better price
Over the long term, a cheaper price will result in way more income than this getting repriced to a 5% yield.