Superior Plus Corp T.SPB

Dividend cut seems inevitable???

[mickeymouse]

Why is this an assumption some people are making?

Here are some numbers from the CIBC analyst report from Aug 1/2024:

AFFO per share in 2024 - 1.29 
AFFO per share in 2025 - 1.47
Adjusted funds from operations is expected  to increase in 2025.

Net Debt/Ebitda in 2024 - 3.8x
Net Debt/Ebitda in 2025 - 3.4x
Debt is projected to decrease in 2025.

Payout Ratio 2024 - 56%
Payout Ratio 2025 - 49%
Payout Ratio is projected to decrease to less than half of their AFFO per share in 2025 with the current .72 yearly dividend.

From management comment "5% ebitda growth in 2024 (from 2023) is expected".

The numbers do not indicate a dividend cut is needed - the only reason management may choose to cut is a perceptiion that the market is not rewarding the company for their dividend so they will choose to cut to accelerate their debt reduction.

The average analyst target is 10.33 - if SPB hits that target the dividend would be 6.9% and there would be no talk of a dividend cut - the whole discussion is due to the share price decline as Certarus shreholders exited and shorters jumped on the opportunity to drive the share price lower - the current 9.6% dividend has nothing to do with their ability to cover the dividend - it is a direct result of the share price drop

One last point - analysts and brokers hate companies that pay a high dividend as shareholders tend to hold these companies for the consistent cashflow returned to them - brokers make money from investors buying and selling - that is one of the reasons they heavily promote stock buybacks for companies through SIB's/NCIB's as opposed to paying dividends - they need to be reminded that shareholders own the company and responsibly returning money to the company owners in the form of a decent dividend is an reasonable expectation.

[Freezerburn]

That's  what I was gonna say... but I can only type for 15 seconds.

[InvestSmarter]

Entering our busy season with a La Nina. Cutting now would make 0 sense.  9.5% eligible yield that is well covered is a gift.

[Rocet98]

I just wondering we're are the insiders??? They are no longer on blackout! And not buying???

[ol_griz]

Well aware that it makes little sense. I have always maintained the same. But. The market does what it does.  If the shorts cover it may be avoided but the pressure when the dividend reaches giddy heights may become unbearable.  Market irrationality seems to know no bounds these days.  Look at oil.