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The Empire District Electric Company Message Board

  • dar200 dar200 May 26, 2011 11:50 AM Flag

    Bargain time

    Knee-jerk selloff is overdone, as usual. It's bargain time for the investor who can wait two years for things to be back to normal.

    Revenue reduction will be temporary, as will dividend suspension. Repair costs will be recovered by emergency rate increases, which will be approved shortly after submission of the request. Rate increase may also cover lost revenue to make up allowed return on equity, but this is less certain than rates for repair costs.

    Ultimately, rate payers will pay for the damage and lost revenue. The dividend suspension is also only temporary.

    Is a 30% total return in two years on an electric company enough for you? It is for me, so I bought 2,000 this morning at 18.80. By buying today, I get the pending dividend. Yup, the price will drop by 32 cents tomorrow, the ex-dividend date, but that will soon be forgotten.

    FPL (now NEE) dropped siginificantly in 2004 on the back of 4 hurricanes in Florida in August, but they got their repair cost rate increase approved and the price came back.

    Same will happen here.

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