i have been through this cef "cycle" of cutting divys b4. This is the WORST TIME TO SELL! we have a case where the income investors are selling in a panic to put their $ elsewhere and the value/ cap appreciation people are stepping in and buying and also capturing a decent yield while they wait the storm out!
Now that couldn't be a coincidence could it? I was waiting for the official news as I know there will be a wacking of the share price with the dividend falling about 75%. Now the question is when to buy in relation to NAV discount. Right now it is about 33%. Under $3 should give a 40% discount. Will that be a good tradeoff for the lower dividend?
Here's the method that I use to value the stock of a yield CEF. Annual Div / Share Price = ROI For AWP it's now 0.03x12 / 3.35 = 10.75%
That's a great return in today's 12mo CD @ 3.00%. (principle insured to $250K)
Now you, the investor, has to decide if that's a good return based on the risk involved in the strategy of the Fund, it's future performance, management performance,(the past has been really bad, but so has almost everything else), stability, growth potential, etc. (your principle is NOT insured, hence, more risk). The real estate market and thus the underlying stocks in the fund are in a steep down market and the 12-18 month outlook is not good at this point. It is wise to be defensive and perserve captial at this point and hope to be in right stocks once the market turns. This is where AWP management earns their money.
Even though you never like to see an income fund reduce it's dividend distribution, I think it's the right move at this time, and with more information provided on the up coming conference call, it may be the right time to add to your position.
I'll hold until I get a better read from the call.
Way to low. It will be cut but the companies that are paying dividends in this type of asset class are paying unbelievable yields. Of course the dividends could be cut or eliminated buts that why we have professional stock managers at Alpine. AWP has an NAV of 4.10. With a little rally we could see that go to 4.25. I believe a 15% dividend can be earned on this NAV before employing the capture strategy. ( Good reit preferreds are paying 15%.) A little leverage,some call selling some preferred buying and 15% on NAV is a given. That would put us at .6375 on a 4.25 NAV put everything else into play and take it up to .72 for a 17% div on NAV and I think you have the right number. Of course I could be off as management can pay whatever they wish but I believe a 52.5% cut to .72 is sustainable with stable r rising NAV.