RE:Volumes keep climbing....... Accumulation remains underwayJust thinking out loud FWIW:
I frequently compare Gamehost and Suncor.
They are obviously very different companies in many respects, but I have owned them both over similar time frames, as such I compare thier capital allocation strategies.
Both companies have solid management (was not always true for Suncor)
Both companies are enjoying respectable free cash flow.
Both companies are closing in on total debt targets.
Both companies pay very conservative dividends (payout ratios 40% - 50% approx)
Both companies are mopping up loose shares on the open market.
The difference between the two (IMO) shows up when the debt targets are reached.
Suncor has a massive capex expense in the future in terms of replacing their base plant.
Suncor acts like it is no big deal, but the market feels otherwise IMO. (This is not new)
Gamehost, on the other hand, has major capex in the rear view mirror for the next several years. (Excluding theoretical expansion / acquisition etc.)
Excluding macro issues, like global oil prices, staffing changes in Ottowa, etc., Gamehost would seem more likely than Suncor to raise the dividend meaningfully.
Suncor has a massive liquid market in outstanding shares to mop up, Gamehost, not so much (Under statement)
I just watched Suncor's latest presentation. They flat out tell investors dividends will not increase more than 5% (approx) per year. Basically, once debt targets are reached, the free cash flow beyond the conservative divvy will all go towards mopping up loose shares. TLV would be proud, less shares, better per share metrics over time, it all comes down to your timeline. Normally Suncor sells off when they don't raise the divvy, this time, the opposite, go figure. Something has changed :-)
At the end of the day, my investments exist to increase my wealth, but this needs to happen within a reasonable timeframe. As I approach retirement age, (like soon) I find myself preferring dividends as opposed to increased per share metrics.
I still consider myself a long term investor, but I must admit, I am not the same young man in the arena (If anybody remembers Theodore Roosevelts old quote :-)
Different timelines for different investors I guess?
Thoughts or comments welcomed,
Nukester