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

Dividend Cut Imminent

[Bigdaddy007]

This is not a retirement residence, comparisons to Chartwell are ludicrous. I don't like the way they calculate the payout ratio. Reminds me of the funny accounting we experienced over at just energy. Stb has a far greater chance of going to $2.00 than $14. Reminds me of Chartwell, swell.

[pjn0987654321]

So imminent that they've been approved through to April - https://web.tmxmoney.com/article.php?newsid=80489870&qm_symbol=STB

[Bigdaddy007]

Yes, because 14% yields are historically sustainable. ;).

[jammo71]

You "don't like" how they calculate it? Any chance you can be more specific, or are you more comfortable using vague statements and referencing other companies that as far as I can tell are completely unrelated? FWIW, that last question was rhetorical as I don't expect you to be able to answer with anything specific.

[Bigdaddy007]

I don't spoon feed inexperienced investors. Anyone who's been doing this over the decades knows exactly what I'm talking about. And yes, the creative accounting over at just energy is directly relatable to what's going on at stb.

[jammo71]

I hate to blow my own horn but I pretty much called that.

[Bigdaddy007]

There are many serious problems facing stb going forward, especially related to dividend sustainability. One issue that's not being discussed is the effect of higher interest rates. Stb is highly indebted and higher rates are going to squeeze the already thin margins, forcing management's hand on the dividend. Higher rates will likely be the cause of the second dividend reduction.

[jammo71]

By what metric are you referring to STB as "highly indebted"? Feel free to also not answer that under the presumption of me being inexperienced. As well, I'd love to hear more on your theory about higher interest rates causing the second dividend reduction (when was the first one again?) Unless I'm mis-remembering, STB has operated in higher interest rate environments and still

[slimjim11]

A year ago, the monthly dividend was C$0.046368 per share. Now, it's US$0.03667, which at a 70 cent dollar is C$0.05239. Is this increase of 13% in the dividend in Canadian dollars the first "cut" being referred to by Bigdaddy007? If so, it would seem he's making the inexperienced mistake of not comparing Canadian dollar dividends to Canadian dollar dividends.