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Exelon Corporation Message Board

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  • fatpitch2 fatpitch2 Nov 2, 2012 10:57 AM Flag

    Div cut will rally the stock

    I listened to the conference call yesterday ... maybe I need to listen again, but I did not hear anything that made it sound like a dividend cut was imminent. What I heard was:
    1) A large amount of CapEx spending was pushed out to improve financial condition
    2) The expectation was for power demand to increase
    3) Opportunity for rate increases/margin expansion

    The CEO did say that preserving EXC's investment grade rating on all bonds issued (by any operating division) was "job #1". Providing return to shareholders was #2.

    In response to a question regarding the dividend what I heard (and like I said maybe I need to listen to the call again) was that the dividend was secure for now, but that if conditions did not improve (as per the projections the company is making - increased demand and increased margin) then at some point the dividend might have to be cut and that a very high payout ratio (say 90%) was unrealistic.

    What did you folks hear?

    Sentiment: Buy

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    • I need to read the transcript but from everything I have read, your interpretation is correct. I believe he did not mention the dividend cut on its own but that he was simply responding to a question about a possible dividend cut if conditions deteriorate further.

      I have a limit order to buy at $32 and will put in another one at $30 since I don't believe they will fully cut the dividend (if they cut it at all), that natural gas prices will make their way up to $5 over the next 18 months, and that the worst will be over in the next 6 months.

      I should note that I am investing money I won't need for at least a few years and that I am going to hold this for at least 4-5 years.

      Sentiment: Buy

 
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