RE:RE:RE:Great Day
Shirtlessnomore wrote: And ACTUALLY!! you are the one that said we were "overpriced" a couple months ago and you saw no catalyst for this to go higher. So I'm not sure how the fuch your expectations havent been met????
If you remember my basis of the over priced idea was share price in relation to the divided, the thesis was that the dividend being raised back to previous levels would not only bring the share price into what I feel is proper value but also offer upside until it got back in line at 24 cents. It was also stated that I did expect it to jump back to 24 cents a year, but I believe I mentioned by end of year or soonish. So my expectation is that the dividend raises as I've felt the share price has moved earlier that was needed, and I wasn't disappointed at this, just it wasn't a buy at the current share price vs payout, there were better places to put your money and I've made 3 investments since then and have gained 66% on those 3 moves in the short time window (one of my purchases doubled in value and the others offered much higher dividend returns) vs the 18-19% I've gained here.
As for no 'catalyst' at the time the share price was moving upwards on no news just easing of restrictions, it was mentioned that new investments would be a reason for share price to move off the historical average share price vs dividend since the markets are forward looking so that movement would be expected, but at the time that hadn't happened, since I think we have had 1 or 2 minor adjustments within the portfolio but they are to small to effect the current valuation, but they are good enough to justify the dividend increase that we have seen.
As an update based on 21 cents:
@ 7% expected dividend you would get a shareprice value of $3.00
@ 7.5% expected dividend you would get a shareprice value of $2.80
@ 8% expected dividend you would get a shareprice value of $2.63
Orignally I had 8% plus as my expectation for fair value basis, but discussing with babedinkleman we kinda came to an idea that 7% was a good expectation number with the share price bouncing each way 50% of the time.
At $2.90 we are below the $3 by approx 3% and within an expected normal range of trading. I'd say for my money I would gain interest in adding sub $2.60 as I stated before I'd like to get a quality discount to fair value for myself. Tho my fair value expectation was altered, my interest purchase price ratio was not.
That said had I been forward looking the price pre-June would achieve my entry price today. Also previously we were waiting for management to signal upwards dividend growth, now we have it and I'm pleased, I just expected a quicker snapback is all. We all have our own expectations, I was just voicing mine.
Based on my purchase price of $2.15 a little over a year ago my dividend yeild is now 10.24% and I've gained over 45% total return.
babedinkleman wrote: So in your eyes the company should raise the dividend to a 113% payout ratio given the current state of the world and 'grow into it'? Huh? That would be idiotic. Why would any responsible management team do that given the uncertainties in the world?
The company has shown a willingness to get ahead of itself in the past, Q2 2019:
“This resulted in a payout ratio of 110.0% for the three months and 116.9% for the six months ended June 30, 2019. The Corporation intends to use its $46 million cash balance to fund future royalty acquisitions, with the intention of achieving a payout ratio that approximates 100% over time. The Corporation expects the payout ratio to remain over 100% until such time as further royalty acquisitions are completed and excess cash has been deployed."
Thus there is a history of being above 100% and getting ahead of themselves short term in the company and my "idiotic" idea of this doesn't seem as far fetched as you make it seem and I believe we have the same "responsible management team" that has done this in the past. The highlighted area seems like a long winded way of saying "grow into it" don't you think? With increasing opening Mister Mikes should see upticks in businesses since restaurants I've been at the past few weeks since the reopening of dining have been super strong, I waited 45 min for a table at Boston Pizza last week, I would expect the hype to be up for them too, also they are not paying the full royalty we are entitled too from them but it would be expected that we will within a quarter or 2 as we normalize.
Next quarter we should see the effects of a full quarter return to 100% royalty payments from Sutton as they did so in June, also an increase of the 100% royalties took effect start of July.
From Mr Lube the expectation that the business should return to pre Covid levels post restrictions living as they are, and a full quarter of that should lead to more gradual upticks, also we are expecting more generation from 13 new locations and a full quarter with an increasing royalty rate.
Those seem like fairly easy to factor in increases to expected royalties, they may not make up the full number needed to, but they are a very good influence and I didn't touch on Nurse Nextdoor, AirMiles and Oxford. Oxford likely doesn't help much growth/return to normal wise for a anouther 2 quarters as the next quarter feels the summer season and we don't fully know the main education situation come September as it seems to be changing weekly as per the news, Nurse Nextdoor reports sound positive, but I have not educated myself enough on them to have an opinion other than the basic I like it and AirMiles seems to finding itself and for that I have no expectations.
If I understood the statement correctly, we expect to be at a 90% payout ratio in the full Q2 as this is the preliminary, what is 100% maybe anouther penny or penny and half over the full year, that would get us to 22-22.5 cents. The growth that seems baked in to the next quarter maybe .5-1 that gets us in the region of 22.5-23.5 so I don't see 24 cents as crazy and feel we can afford to get a little ahead of ourselves and my 113 number may actually be lower as my original read skipped past the expectation that we are at around 90% payout, should we have upped the dividend to 24 cents the payout ratio might be just a little above 100%
I'm not reinventing the wheel here, I'm just going off what's happened in the past as a realistic standard for what is possible going forward with the positives.