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Inergy, L.P. Message Board

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  • webesure webesure Mar 8, 2012 1:44 PM Flag

    When NRGY cuts divi 50% it will still be 8%

    If back in Dec when stock was $24.00 and paying 2.82 if dividend is cut 50% shouldn't stock be selling for approx $12.00???. Any thoughts on this. One way or another I believe the stock will have to sell off.

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    • No because the market is already expecting the cut and it is mostly priced in. You argument would only be logical if you based the 50% price cut on the price at a time before the market expected the cut. 50% of $35-40 brings us down to today's price.

      My suggestion would to to take the distribution you expect them to pay and then apply a 10% yield and there's your target price. And the result would not be much if anything below today's price. Maybe $14 at the worst case and that would probably mark the lows and it would gradually move up from there.

    • If a 8% dividend is sustainable for the long run - and if the weather is "normal" next winter, it could go back up, then I think the current price around 16 would be an attractive entry point - the real problem here is speculation - how much will they cut, when, etc. etc.? Wall Street HATES uncertainty.