INMO the div cut doesn't matter if your buying this for along term income flow what happens now only helps you.In 2 years this will all be in the past and the reit's NRO hold will be just fine.Buy now with in 2-3 years with the market recovery we should see .10 a month in div.I bought knowing this I don't think we will see anything over .10 div for many years. At these levels $1.50-2 you could be locking in a 60-80% return with a some patience.Might get a good buying today and all this week!GL!
A handful of observations regarding the div and today's price action:
1) This fund has historically sold at a discount to nav so the recent selling at a premium was abnormal and so to some degree the a drop to a discount should have been expected. So this news can be in part has just being the driver of a return to "normal". It still hurts if you made your purchase in the 2s all the same.
History of discount/premuim can be found here
2) The drop in the div I think should have been expected. They had to sell assets back when this fund went sub $1 because of the leverage. That had to lower earnings.
3) My problem with this fund has been their dividend too much of it return of capital and not earnings. Maybe this drop will get it closer. But it is very hard to get good data on what makes up the dividend. But a large dividend that is just a return of your money is worthless. And in 2008 almost all of the money paid out was a return of your money not actual dividends. So while the decline hurts maybe it reflects a more "honest" dividend in that it is finally starting to reflect what this fund is actually earning.
Add me to the people who think now think there are better places for your money. I have not been impressed with the funds management for a while.
If everyone is looking for future cash flow it doesn't matter!The better options are not really much better your better off buying in these days to an investment that has cut.Better then buying in before they cut an you lose more of your capital.I'm buying more $1.50-1.75 lowering my cost basis.Then will sit back an collect checks to pay my mortgage 2-3 years from now.PATIENCE!
With the buy back, I would hope this would revert close to NAV.
Sneaky Bastards is right. Are they having to cut the divvy to fund the buy back? This announcement comes just hours before I get my Tender offer e-mailed to me?
Hey Miz, there may be better paying options now, but after today, I don't know if I would trust them any more than NRO.