Has anyone heard anything about the next quarterly dividend? Is the thinking that they MUST lower it a bit from where it was? Or have they done so already and I missed the news? (Own this but don't follow closely.)
The dividend will be reduced. Think about it this way: on the last call, Delaney said that CSE distributes much more than it is required to distribute, so there is room for a reduction even within REIT distribution requirements. A substantial amount of CSE's dividends the past several quarters has been characterized as "return of capital". CSE would not be raising capital, as it did last month, only to turn around and return it.
I was just going to post yesterday that it is time for someone to come on and ask about the dividend and then someone to say it will be cut or done away with. It happens every quarter and the news that the co. plans to reevaluate the dividend after the finalization of the Freemont deal will make this a news item this quarter for sure. There are conflicting ideas on this as the co. also wants to remain a REIT status for the remainder of 2008 meaning they are required to pay out a substantial portion of earnings. On the other hand they could lower and pay what is required in a special divvy in December. At this point pure speculation and guess work. So your guess is as good as the next guys.
"the co. also wants to remain a REIT status for the remainder of 2008 meaning they are required to pay out a substantial portion of earnings"
GAAP earnigs are pretty low though. By paying the 60 cens the first two qtrs, cse has payed way above what was required for reit staus not only for the fist two qtrs, but possibly already paid enough in dividends to satisfy reit status for all of '08.
CSE has paid the 60 cents/qtr from adjusted earnings/cash flow. Why? To prevent the stock from falling much further. Under GAAP the div could have already been slashed quite substantially.
My prediction is CSE will cut div to 30 - 40 cents.
Furthermore, it doesn't make sense for them to issue new shares to raise capital and then turn around and use that capital to pay dividends on those new shares. That alone should signal they will be cutting the dividend very soon. They'll use this money to take advantage of all the fantastic opportunities in this crazy market. The strong shall survive and thrive!