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Corrections Corporation of America Message Board

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  • Idontwanttohearit Idontwanttohearit May 18, 1999 5:35 PM Flag

    A simple and elegant solution

    Your question was improperly phrased. I didn't
    say they didn't make enough FFO to pay the regular
    dividend. I said they didn't make enough to pay the special
    dividend in December.

    Any examination of the
    fundamentals proves that. And NO answer has ever been recieved
    as to why they haven't already paid the required
    special dividend if they could afford to do so. There is
    no reason to wait until December except that they
    don't have the money. They were hoping to earn the
    money, or borrow the money, or dilute the company by
    issuing stock (all negatives for investors). Their
    ability to do any of these things now is
    questionable.

    The remainder is simple logic. Once the company gives
    up on paying the special December dividend, and
    faces having to pay the resultant tax penalties, there
    remains little reason to continue paying REIT-required
    type regular dividends from their perspective. They'll
    need to retain that cash to pay Uncle. Or face the
    possibility of becoming insolvent.

    This logic seems
    inescapable. I wish somebody could put forth any argument to
    counter it, instead of the ostrich-in-the-sand counters I
    keep hearing.

    Valueing this stock on the basis
    of a dividend yield that is increasingly insecure
    seems foolish. And that is why all the smart investors
    are bailing!

 
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