Long ago management said that as part of it's required change to a regular company, it would have to cut the dividend to aboout the 5 or 6% level. This is no surprise and is necessary if it's going to compete successfully with it's new biZ model. Take heart, it has the resources to be very successful.
I said that PWE would again cut their dividend, even before management told of their plan to cut the dividend as a part of conversion to a corporate structure. And, as a corporate structure, reducing debt gains a higher priority than dividends, so further cuts could occur, especially in their first year of new operations (2011). This management just cannot be trusted.
The reality for PWE is that there is a new reality. It's time to change one's view of this company, as well as the other CANROYS, from a BC. to AD. perspective. No sense being frustrated over the change in the yield. Corporations don't make monthly distributions and their quarterly's don't come with yields as high as royalty trusts. As for where PWE is now;I think that we have weeded out most yield investors. I do not think that it would be unreasonable to surmise that the 5 to 6% yield would rise over time with increased valuation. But valuation will drive yields,not the other way around as in the past. IMHO
With oil going to $85 China just increased their imports..and increased oil production we should see a nice pop in the stock as time goes by. With the new capital program they will be drilling alot of new land base wells. I'll take the 6% divvy and wait for $100 oil over the next two years.
DON'T HOLD YOUR BREATH..See the PAST MONTHLY DIV'S..Check them out at Yahoo.Finance..HISTORICAL PRICES...This is 4th TIME...PWE has SLASHED IT'S DIVIDEND..PEOPLE ARE NOT GOING TO KEEP BUYING IN..WHEN DIV. KEEPS GETTING CUT..Just look at many USA companies... GOOD COMPANIES INCREASE THE DIV..Check out "O"...different industry..BUT EVERY COUPLE OF MONTHS THEY INCREASE THE DIV..AND PEOPLE KEEP BUYING IN..AND PUSHING STOCK PRICE UP...Goose
After some people bail out who haven't been paying attention and are surprised by this dividend cut, the corporate conversion and the end of uncertainty about the dividend yield should help this stock to rally back up to 22. I think in the last few months people who want very high dividends have been selling but some institutions and others who want more earnings growth have been waiting to see what the dividend yield will be before they buy. They've just been cautious and waiting to make sure they get a yield in the 5-6% range as previously announced by the company. Now with that uncertainty gone we should see buyers move in at this price level. The yield for PWE will be similar to BTE's yield, and that stock has been holding up well. Overall it's very positive to eliminate the uncertainty about dividend payments.
You mean those people who bothered to read the company press releases over the last 6 months had more information than those who chose not to? Yes, that is true.
PWE told us this was coming for months.
If you couldn't be bothered to read their releases then it's your problem.
I agree, but as PWE implements its new business model, shareholders are also adjusting their portfolios. Since PWE management said the goal is to have a payout of 5-6% to complement price appreciation of the stock, income investors will gradually sell off the stock to find other sources of dividend income.
When I first bought PWE its monthly distribution was 38 cents. Of course the stock was over $30+ pps. Now, the distribution is down 75% and the stock is about 50% off from its price when I first took a position. Fortunately, it has been a good trading vehicle and I am a little better than breaking even.
My only concern is I hope management will do better by shareholders with the new business model than what they could deliver under the old one although I do believe there will be capital appreciation, particularly with rising oil prices. Now would be a good time to buy or average down especially with income investors surrendering their shares.
Cutting the dividend is the worse thing they can do. I expect the company will lose millions in market value.
Did they cut salaries too?
Sure I want to see the company expand but it can do so without hurting unit holders.
I hope they rethink the proposed distribution cut.