Post by
malx1 on Mar 09, 2022 11:51am
Gamehost... slow-playing a pair of Aces
How does one double their dividend?......................... Slowly
When the next dividend rolls into shareholders' hands, it will mark 24 months since they have last received a dividend from this corporation.
At $0.03/mo, the dividend is currently set for $0.36/yr.
We can conclude that the forward payout ratio is close to 40% if we estimate $0.88/yr of free cash flow with restrictions removed and GP upgrades completed.
BOD and management have set up something special here with a half-dividend. Much like the E&P companies who are allocating free cash flow to share buybacks, debt reduction and dividends; Gamehost is following suit!
By holding the dividend back to $0.36/yr for time being, GH can continue to focus on its NCIB and chip away at debt.
Here's a round-number layout of what the next 2yrs could look like:
Free cash flow = $20mm/yr
Dividends = $8mm/yr
NCIB and debt reduction = $12mm/yr
Follow this strategy for a few years, you could end up with $300mm market cap, $30mm net debt, share count of 21mm.
Once completed, dividend could be doubled from $0.36 to $0.72 and still be close to an 80% payout ratio.
Alternatively, you could take the slower approach with dividend:
2022 = $0.36/yr
2023 = $0.48/yr
2024 = $0.60/yr
2025 = $0.72/yr
Company says they are looking at a bright future for Alberta. Yup, haven't seen this optimism since 2004-2006.
I think our dividend guy, Kasking, may offer some shares at $20 one of these days...
2025 maybe