Contrary to what a couple of numbnuts on this site are spouting, I reiterate that the current rate dividend payout is safe and the stock price should continue to stabilize and rise to reflect the high interest derived from the dividend payments. I'm sure most of you read the article below. I think the credentials of Morningstar are a little better than those of the individuals with "alternative views".
Hawaiian Electric (NYSE:HE - News) A combination of rate relief, new generation capacity, and an upward-sloping yield curve should improve the fortunes of this troubled utility/bank over the coming years. There are pending rate cases at each of its electric subsidiaries, and interim relief has so far been supportive. On the bank side, we anticipate net interest margin expansion as the yield curve normalizes. Although we do not expect any near-term dividend increases, Hawaiian Electric's yield remains considerably higher than many of its utility peers'.
Yes, banks consolidate. ASB already did by buying out one of the other smaller Hawaii banks (Interstate?). That's how they got to be #3. Believe me, I don't put much stock in the management and I totally agree with you (and others)that without the rate increase this stock will tank. However, it is a fact that the rate increase applications are far along with tentative aacceptance already by the CA and all additional information requests submitted to the PUC. The approvals should not be much farther away.
The morningstar article says absolutely nothing about the dividend nor the ability or correctness of paying the current dividend.
Basic Accounting 101 states that a dividend is paid out of the after tax earnings of a firm. If the earnings are not sufficient then the dividend should be cut/reduced to a point below the earnings.
There are insufficent earnings right now to pay for the current dividend.
So where does Connie get the money?
From an accounting standpoint these unjustified dividends would come from "Paid in CApital" - money from new stock sales by the company; or from "Retained Earnings" - the diffence between earnings of the past and dividends of the past.
The dividend at its current rate is certainly not safe.
Connie and her board of idiot directors should be fired.
Hey, think it through a little before spouting some irrational babble! DO YOU THINK MORNINGSTAR WOULD GIVE THE STOCK A POSITIVE SPIN IF THEY FELT THE DIVIDEND WAS IN DANGER? I think Morningstar guys have completed Econ 101 and way beyond that.
You are wasting your time trying to explain it to some who absolutely refuse to consider reality. They have already learned the hard way, but refuse to see it. Increase utility rates on people just to cover poor management decisions? Increase utility rates so the dividend can be paid? The PUC knows NOT to do either! Rates, SHOULD rise to cover normal costs of doing business, not to keep up a crippled dividend policy. Of all things, HE SHOULD NOT be issuing new shares to cover 50% of the dividend! Here I am wasting my time again on Economics 101!