STUDENT TRANSPORTATION INC 5.25 PCT DEBS T.STB.DB.A

A few questions for the regulars ...

[emba33]

Hi Folks: I have a significant position in STB ... and it was supposed to be a stable dividend payer for me. I averaged down recently. A few questions for the regulars ... 1) Although most BULL BOARDERS do not feel the dividend will be cut -- higher dividends often lead to trimming. If the dividend gets cut, do you think STB would go up or down in price? 2) Why do you think the stock price has been punished so much recently without much of a chance in fundamentals? Your thoughts are appreciated. Thanks, Emba33

[mike06]

1) DOWN without a doubt. 2) Dividend cut fears. Easily manipulated stock (with well documented history of this). Downgrades. Lack of recent significant news. Not understanding the company / "quick look" poor fundamentals (ie astronomical PE ratio and 10+ % dividend). Large institutional share dumping. Take your pick of any/all of those reasons.

[righand2]

Have to agree with all of your points. But you have to add the fact that the dividend may never be raised, and most investors like a company with the potential for higher dividends in the future. But at these prices, the risk seems reasonable. I don't really expect a dividend cut.

[emba33]

Hi mike06 and righand2: With most stocks, the high yielding dividend stocks get pushed down when investors feel a yield is likely to be reduced (partially because the yield is no longer helping to keep the stock price higher).  Also, we have seen several cases where a dividend cut actually causes the price to go up -- presumably becauset he uncertainty has been removed. What makes both of

[jammo71]

In response to #1, the idea of a dividend cut because the market is pricing it in is certainly not a rarity, but consider the history - STB has not reduced their dividend, ever. The price has been significantly lower that today's prices and the dividend stayed the same. So it's possible they'll reduce it now, but the track record indicates they won't. In response to #2, a trusted

[emba33]

re:STB has not reduced their dividend, ever Sounds like Crescent Point last week ... up to the last minute, they claimed they would not cut.  They might argue that they would not need to go to market as much if they were reinvesting some of that revenue.  Even a cut in half would leave a good dividend.  I am certainly not wishing for this, because I have a meaningful stake in this

[jammo71]

Lots of things sound liek lots of things, and if you follow incongruent examples too often you can get into trouble. Companies do cut dividends to satisfy the market's expectation that they will, there's no question. My only point is that STB has traded lower that this (under $4 in summer of '09) and did not cut their dividend then, so what would be the reasoning for doing so now

[FSComeau]

STB's dividend is covered by their cash flow however......................

[carmech]

The dividend is not unreasonably high, the price of the stock is unreasonably low, thus creating a high yeild.

[Fantome]

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[emba33]

Hi carmech: For what this is worth ... I've heard many analysts say that, in general, a stock should not be falling that much if the market really feels the yield is sustainable.    Emba33

[Franko13]

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