With the dividend guaranteed, one method of valuation of the income stream is to equate it with interest rates. But which interest rate?
For instance, if your alternative would be to place these funds in a CD paying 4.5%, then FAX is equivalent to what you would have to invest at 4.5% to recieve FAX's dividend; .72=X(.045) or $16. If FAX sold for $16, it would produce the same income as that 4.5% CD.
Of course, that ignores risk, and a CD is FDIC insured. So lets look at a more conservative estimate. Lets use the broker margin rate. This may be appropriate because if you have a margin account, you may be able to borrow against it and not even use any of your own funds.
These are running in the 7-8% range. So, lets use 7.5%. At that number, if you invest in FAX with either your money or by borrowing, its break-even at $9.60. Up to that number, some might say it is smart to buy all you can.
Now, you might be able to get a better return with an alternative investment, like internet stocks. But the analysis here is the same- risk is involved. These other investments only make sense if you can get those returns with comparable risk.
$9.60! That's my target price for FAX. And that's the broker good-til-canceled order to sell entered for my 20,000 shares.