RE:RE:Targets
Binkie wrote: If they do initiate a .07/month dividend or $.84 per year, that's 12% on a $7 stock. Market generally drives dividend yield to 7% or less which would have the effect off driving the share price to $12 as a7% yield is $.84 yield. No guarantees on either the amount of the dividend or the market response but it does allow us to make a reasonable projection and provides yet another way of predicting future valuation in this fiscal year.
I don't wanna poo poo on this as this is exactly the kind of thinking I like to do but I have a couple thoughts to add...
I think the current run up has the market baking in the soon to be announced dividend, for the most part and I say that loosely because my thinking is still significant upside. When this was paying previously as the nice run was ending, this was trading on dividend yeilds in the 8-9% save for periods of adjustments, mostly because O&G was out of favour and market was selling down. It's currently bidding up, but not everyone is on board and with today's ESG and other ideals in the market energy companies are not going to be owned by as many portfolios, that effect will soften as carbon foot prints improve, feelings change and evlove and of course dollar signs are printed. Because of all that I feel this will run at a high yeild for a bit after the announcement through the fall, maybe in the 8.5-9% area which using similar maths I'm suggesting a 9.30-9.85 price range on the announcement. I would like to see $10+ but I don't know that it's gonna jump +30% on this announcement when the market has known it's coming for a long period, as let's be honest most of us jumping in or adding since Nov-Dec have been waiting on this. I could see a 10-15% jump on the announcement day. (BTW I hope my more tame outlook is wrong, I would love to see $12+ this summer!)
Longer term outlook, I like the 7-7.5% settling yeild number in mid-late 2023 after the debt is paid off and we get that hike (I predict at the end of 2022) which will likely almost double our initial payout which may see us getting 12-14 cents monthly. There will likely be a series of price step ups likely quarterly as the company confirms debt information and as the market flocks in seeing the risks run away when we have no debt.
12 cents @ 7-7.5% = 19.20-20.60
14 cents @ 7-7.5% = 22.40-24.00
As you can see I too feel we have a long runway of gains and payouts coming, but I think it will be much more gradual to get down to a stablizing yeild of that 7ish% area.
I like doing these math exercises with underloved dividend growers right before they are due to announce dividend hikes, I recently played this game with CNR, BCE and AEM, predicting forward normlized yeilds and where you think that the dividend is going can help find an extra few dollars in shareprice gains if you make moves before the market reacts, as forward looking as the market tries to be sometimes it gets a little outta whack.