Goes from $1.80 year to $1.38 year. Will the stock take a 24% haircut on this development?
"FARMINGTON, Conn., Nov. 28, 2012 (GLOBE NEWSWIRE) -- Horizon Technology Finance Corporation (HRZN) (the "Company" or "Horizon"), a leading specialty finance company that provides secured loans to venture capital and private equity backed development-stage companies in the technology, life science, healthcare information and services, and clean-tech industries, announced today that its Board of Directors declared monthly dividends of $0.115 per share for each of January, February and March 2013. These monthly dividends, which will be payable as set forth in the table below, total $0.345 per share for the first quarter of 2013. Including the monthly dividends declared for the first quarter of 2013, Horizon will have declared $3.545 per share in cumulative dividends since its October 2010 initial public offering.
Summary of First Quarter 2013 Monthly Dividends
Declared Ex-Dividend Date Record Date Payment Date Amount Per Share
11/27/2012 12/18/2012 12/20/2012 1/15/2013 $0.115
11/27/2012 1/16/2013 1/18/2013 2/15/2013 $0.115
11/27/2012 2/19/2013 2/21/2013 3/15/2013 $0.115
Total for First Quarter 2013: $0.345
"Our new dividend strategy is designed to pay monthly dividends that are covered by net investment income over time," said Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer. "Our approach to sharing 2011 net realized gains was to pay out a substantial portion of those gains through incremental cash distributions to our stockholders over and above net investment income levels. With nearly 80% of those gains now paid to our stockholders, we believe now is an appropriate time to implement our new dividend strategy to more closely align dividends with net investment income. We will retain the remaining realized gains as well as future warrant gains as undistributed income or 'spillover income' for future payout consideration."
When declaring dividends, the Horizon Board of Directors reviews estimates of taxable income available for distribution, which may differ from consolidated net income under generally accepted accounting principles due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given year for distribution in the following year. The final determination of taxable income for each tax year, as well as the tax attributes for dividends in such tax year, will be made after the close of the tax year.
Horizon maintains a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Horizon declares a dividend, our stockholders who have not "opted out" of the DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of our common stock. Horizon has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly-issued shares will be valued based upon the final closing price of Horizon's common stock on a specified valuation date for each dividend as determined by Horizon's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs, which are borne by Horizon."
As I have posted here before, the cut was expected. The magnitude of the cut was probably slightly greater than the consensus, somewhat offset by the shift to monthly dividends which the market will like.
I think at $13 the cut would be fully priced in and, frankly, I wouldn't be surprised to see $14 hold. At the new level the dividend is pretty well covered and you have a 15% discount to book value.