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Reynolds American Inc. Message Board

  • conan_sanjose conan_sanjose Jul 30, 2003 2:33 PM Flag

    Ok, divident is now greater than profit

    3.90/share = 97.5 cents/share per quarter divident, while their earnings was 83 cents/share. Now what? Are they going to cut the divident? Otherwise they are losing money.
    They can comfortably cut the divident by 50% and it would still be 5-6% which is decent with most companies' standards.

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    • Two points on the dividend question, in addition to the point made regarding cash on the balance sheet. Second quarter earnings included $.40/share in non operating charges. Part of that charge was non cash, relating to accelerated depreciation of idled equipment. The other component of the charge was for a one time termination fee for ending the NASCAR sponsorship. So actual operating earnings were $1.23/share. Second, free cash flow per share including non recurring charges, should be around $4.27/share this year. That is because at this stage of a mature business, depreciation exceeds capital expenditures. So, even at this depressed earnings level, the dividend can be paid out of free cash flow. And there is that $1.5 billion in cash on the balance sheet to back it up. Everybody needs to settle down here and filter out the often hysterical noise on this board.

    • They can comfortably cut the divident by 50% and it would still be 5-6% which is decent with most companies' standards.

      Actually, it would stay at about 10%.
      Most people don't want to hold this stock unless they have a very high rate of return. If they cut their div the stock will keep dropping until it yields about 10% again

      This is not really a normal stock. It's price/vield is acting more like a junk bond

    • Actually it's dividend.
      But divident or dividend, after I've had the pleasure of spending it,I call it gone!

    • You can answer your own question if you cared to read RJR's comments on their quarter.

      Also, it's obvious that you don't understand the difference between GAAP earnings, which "include", "NON CASH" charges, and the actual free cash flow of a company.

      Why not take an Accounting 101 course before you embarrass yourself further.

    • Dear Moron,

      First, it's called a "dividenD", not "dividenT".

      Second, earnings (particularly one quarter of earnings) do not equal cash. Earnings is an accounting concept to try to approximate the company's performance. It can be easily manipulated. Cash on the other hand is actual legal tender that you can literally take to the bank.

      Third, their dividend (aka-divident) is $3.80 per share.

      Get your facts together and get your head out of your a$$.

 
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