In about 10 days or so RNP will announce dividends for 1st Quarter of 2009. According
to the distribution schedule $ .10 is interest
earned from holdings and $ .10 ROC. If they cut ROC to $ .05 the monthly divvy could be
$ .15 or $ 1.80 annual. At present price of $5 that represents a 36% yield. The investor world awaits this announcement. If the divvy
holds and is cut by 25% or less these shares
will soar to within a few % of their NAV. Anyone have an opinion? Do we buy more next
I am new to this board.All i know is this stock or closed end fund is yielding 15 percent, has already dropped 60 percent, sells for a 25 percent discount to it's nav and has 2 major insider purchases for 1.3 million. bought a thousand today at 6.08 and will be buying more under 6.I think this stock will eventually pay off big and it pays you while waiting!!
I think C&S is currently showing earned divy @ 9c. Looking forward, I think they migh plan on 8c/mo or 96c/yr. @ $5/shr that translates to 20%/yr. They might pay less each mo. I don't think they'll open funds because it affects their income. & I don't think they will reduce leverage more than necessary for coverage, because it affects their business model. They may drastically reduce mo distribution to be sure it's covered going forward - which means we could get less than 8c/mo w the rest at the end of the yr to keep REIT status. And if mkt revives, divy could increase, but that's months away. Maybe we'll learn nxt week, it'll be interesting. JMO
In the 11/31/2008 report its was noted that the earnings was $ .09 and ROC was $ .11 totalling the $ .20. By law, RETIS must distribute $90% of all earnings net expenses. Accordingly, if 11/30/2008 shows $ .09 the the
divvy can't go below $ .09 per month. They cab cut the split the ROC from $ .11 to a few cents per share divvy and the balance paying off leverage/. A $ .03 added to the $ .09 equals a monthly $ .12 and the $ .08 times 48,000,000 shares is $3,840,000 monthly payment reducing leverage. SINCe NAV is $7.17 leverage is not the worry it once was.
You don't own a REIT. You owns shares in a mutual fund that invests in the common stock of REITS and the preferred stock of other companies. Now for a mutual fund to stay a mutual fund, I would guess they also have to distribute their taxable income. Thus, we may end up in the same place as you state.
There is absolutely no way to predict what RNP's new dividend will be. However, I doubt that it will be anywhere near the 18% that you suggest. Remember, C&S is reviewing its options with regard to all of their CEFs. They could open up the funds and/or combine them, and may well decide to greatly reduce or eliminate leverage. Arguably, the least painfull way to reduce leverage in this down market, would be to pay it off over time with some of the cash flow that would ordinarily go to dividends. You should also keep in mind that capital gains will be sparce in this environment, and capital gains have always been a major component of the ulta-high dividend. I intend to wait and see what C&S does with their CEFs before buying more shares.
It Appears that all the comments made here are ignoring the effects of 43% indicated leveraged of the fund. From what I know about leverage, it is done with borrowed funds. If this leverage is completely eliminated the size of RNP could eventually be cut to 57% of is current size. The present level of distributions has been caused in part do to this 43% leverage.
Key to the future of RNP and is ability to maintain its current payout is the status of the borrowed funds which is supporting this 43% leverage. If RNP has to lower or eliminate this leverage entirely, assets might have to be liquidated. This will all depend on the nature of the loans supporting the leverage and any covenants of these loans. If the loans become due NOW because the price of RNP has dropped below a covenant trigger, then RNP will have to sell assets if they don't have the cash on hand to pay off the loan. Regardless as leverage is lowered so will the size of RNP and of course the amount of the distribution.
As for those who say this is a junk fund and it is like going to Vegas I say WRONG. First, no one had a clue that this financial crisis would get this bad. Second at Vegas all can be lost instantly. RNP is still a viable fund paying a dividend ad it will eventually recover. The REITs it owns are all quality properties which have real value. Vegas has no value.
I agree no way to know what lies ahead. However to me selling is a loser. First assume a drastic cut to 9 cents. At a price of 5 dollars that equals a 20 mmpercent yield. Now I know there are twenty percent yields all over the place now, but when the panic subsides that will look pretty good. If they open up the fund (unlikely)then you will capture the sizeable nav discount.You should expect the dividend to be cut now but in better years it may also be raised. Best to wait and see.My cost basis is already below 5 dollars a share so it seems silly to give up before I know all the facts. I am no longer buying, but if I had to make a choice I would buy, not sell.RRW
I am beginning to think that I and you would have bee better off gambling at Vegas. What you are suggesting is pure wishful thinking akin to playing the roulette wheel. I bought this crap in the teens playing the high dividend game and It looks like I lost. Keep the dividend? Look for a minimum of a 50% cut and more likely one closer to 75%.