unless the world comes to a end 15 would be strong support.20 could be grate buy my bet things get lot worse before it gets better.debt of free world just a time bomb ready to implode.2plus2=4 like it or not!!!
I would like to know if dividend yield of 10% is enough to cover financing costs and leave you some money of my own?
I mean it is plenty too much and the share is heavily underpriced - now.
But this is not a bond where you get your peinciple repayed one day - excluding default - if you sit and wait. You need the secondary market buyer to come back - for he is not there right now - with a realistic dicount rate based on the "relatively" risk free rate and resonable premium.
10 % seems like a lot right now. But what if US Fed and ECB have now other choice but to monetize the government debt?
This would mean allowing rampant inflation to rage free.
This would also mean forcible unification of Europe into a super state with common bonds and thus common tax base. Bismarck, Hitler and Napoleon failed to deliver with blood and iron, what is now almost inevitable through financial bondage to a common currency.
My guess is that we have kind of hit bottom today in the $19.00 range. We did hit around $18.00 in Jan 09 when everyone thought the financial world was ending as we knew it. I don't think we are seeing that kind of panic this time. From what I can gleem this is that much of the action this time is hedge fund driven. Some European hedge funds apparently are now making a run at a couple of Europen banks which is adding to the confusion and disaray. Combine this with the PIGS, a soft US economy and serious M2M trading and you have what we are seeing today.
That being said I will climbed aboard at $19.75 with 1500 shares if the $20 puts I sold get excerized. My criteria for selecting was an 8+% divy, earnings to cover it with less than a 60% payout and a reasonable PE of 6 or less. Unfortunately, I had to compermise a little on the PE but not by much. With this kind of safe divy we should be-IMHO back over $20 soon. In fact if I Have some extra cash I might just jump in for another 500 shares below $20.