A dividend cut is a distinct impediment to RNP growing to where it was a few months ago. From the 09/30/2008 "Statement of Operations" I noted that Investment Income less Expenses was $39,000,000. This does not include the interest expense of the AMPS ( leverage ). Since a REITs qualifications demand that 90% of the Income after expenses be disbursed to shareholders, " Does anyone know the cost of the AMPS", so we can deduct that expense and see the actual Net Investment Income? If we divide that value by 48,250,000 shareholders, we can determine the annual dividend to be paid or better yet, see how much they can cut. If long term holders ever hope to get back their capital,the dividend payout is crucial. At today's closing price of of $8.82 with a annual dividend of $2.40 yields 27%. If the dividend is maintained then the upside for RNP is $24+ in 2009.
like so many "cef"s right now it really depends if the nav can stabilize and start moving up from here or we take another leg down...then i would worry. Even if divy is cut to .16 cents a month or so it still looks like a good long term holding!
A large chuck of AMPS were paid off via the bank line and interest costs reduced at the same time. However, it is my understanding that part of the bank line terms calls for RNP to reduce leverage from 50% to 30% hence dividend might logically be reduced by approx. 20% since they will have to eventually sell off some assets (NAV) to make this reduction.