Both in the periodic conference call and, I believe, in the written report, they had indeed been warning that repeatedly. Manager Mr. Feltus had literally been saying for years that nothing is forever. The only thing that caught me off-guard is that in the last conference call last year he indicated the dividend could hold for another year, possibly two, and it was cut significantly sooner.
Here is a cut-and-paste from a post I made on this thread a little more than six months ago, July 24, 2014 -- and this is why I was a little bit surprised at the timing today: "Update, Thursday afternoon. The manager, Mr. Feltus, seemed generally upbeat in the conference call. He once again said, regarding the dividend, that nothing is forever. And he referred to the last paragraph in the company's written report that he said communicated exactly that. But in today's call he also indicated the divvy "is secure" for now, and by "now" he seemed to indicate one year and hopefully two. As I left the call, not one person had queued up to ask a question. Mr. Feltus must have known that, saying we could even ask about what the Red Sox should do if we wanted to. The operator was making one last offer so somebody may have come in later after I disconnected, but I doubt it. Generally seemed a relatively happy, and short, afternoon."
Not sure about the others, but PHT hasn't lowered its div since its inception in 2002. Management has been telegraphing that it couldn't last forever, though this one today came a little faster than I had thought. In the conference call mid last year, I read Mr. Feltus to hint maybe a year or hopefully two, so I was taken a tad aback this afternoon.
From Business Wire: "PHT's February distribution of $0.1150 per share represents a 16.4% decrease from the $0.1375 per share distribution paid in January. The Fund’s income and reserves supported a stable distribution of $0.1375 since the Fund’s inception in 2002. The prolonged low interest-rate environment has reduced the yields of securities throughout the high yield sector. As a result, the Fund’s maturing higher yielding securities have been replaced with new securities with lower yields, reducing the Fund’s income. This change better aligns the Fund's distribution rate with its current and projected level of earnings and reserves."
Read more here: http://www.heraldonline.com/2015/02/03/6763412/pioneer-investments-declares-monthly.html#storylink=cpy
1. It probably is worth noting that FFC closed 2014 8.86% higher than it closed 2013, 19.05 vs 17.50. Over the same year, the Dow Industrials were up 7.52% and the S&P 500 up 11.13%. All that was without dividends, which in FFC's case were considerable.
2. Since last Friday's close - three days of trading - FFC went from a premium to NAV (4.62 % by my calculation) to a discount to a discount (3.7%). NAV today was actually up from last Friday when it was announced tonight (19.78 as opposed to 19.66), when in that same three days the sales price was down from 20.57 to 19.05. "Morningstar" shows that while FFC used to trade at a premium a lot, two and three years back, it's traded at a discount for much of 2013 and 2014 - roughly half the months. So I wonder - hopefully not wishful thinking - if it just hadn't gotten ahead of itself recently. Sure a painful correction if that's what it is, however.
Around this time of year, after the December dividend has been declared, it's common to get a question or two on here along the lines of "hey, we used to get two dividends in December, what happened?" So, this explainer as to how PHT usually works it, with an expectation -- certainly not guaranteed -- that it may be handled the same this time around.
The fund indeed normally does declare two dividends during the month, but the second one is what it calls its "January" dividend, declared and going ex- in December, taxable as December income, but paid in January.
However, that latter dividend to my knowledge is never declared or announced until after the December dividend not only goes "ex" but is actually paid. And the payment date this year is Dec. 18. So we'll know along about the nineteenth or the twenty-second if PHT follows past practice and comes out with another dividend announcement. Until then, it would be premature to say "woe is me" and assume it's not going to happen.
No guarantees, of course, particularly since the "kitty" out of which they make the payouts is shrinking. My personal guess is that past practice will be honored and we will get one more, but I do think sometime next year we might (finally) see the monthly amount shrink a little. Time will tell.
Yes, you misunderstood. The dividend that they already declared is fine. Already gone ex-. Relax. Starting in October, they will announce one more divvy (presumably one third the amount of the quarterly one that just was declared. adjusted up or down as conditions dictate). The one they declare in October will be paid in Nov., the one they declare in Nov. payable in Dec., and the one they announce in Dec. presumably payable in Jan. but taxable in 2014. Relax, relax, relax.
I'm as annoyed as the next guy that there's been no announcement yet. And yes, many of us remember Q1 2013 when there was in fact a problem (though later resolved and no great consequence). That said, I've read companies say for years that the preponderance of time novice investors try to read far, far too much into the timing of announcements, and that many times it boils down to some decidedly non-sexy issue like when the board has its meeting.
Will be announced when the dividend is announced. Per past practice, announcement could come as early as this afternoon. My best guess is that the ex-date will be Sept. 26 or 29, but wait for the announcement. You can't find it because it hasn't been released yet.
As I interpret the last couple of conference calls from management, and the last printed fund report, the trend could eventually (the last call indicated mid-2015 or perhaps not up to a year after that) force a downward adjustment in the monthly dividend. Increased price volatility is also possible, we were told.
My theory is that it is large holders / institutions concluding that the 30% premium to NAV is too rich going forward. Particularly with what is going to be (long-term) pressure on the dividend as interest rates rise, discussed in the conference call last week. Many sold off in one swoop, in my opinion, taking the premium down almost immediately to about 25%, And of course the broader market selloff didn't help, either.
Bought back in at a penny a share less than I sold Tuesday, so more than covered my commissions and am whole. Will have to watch this even more carefully (if that's possible!) going forward, but for now, no harm, no foul.
Update, Thursday afternoon. The manager, Mr. Feltus, seemed generally upbeat in the conference call. He once again said, regarding the dividend, that nothing is forever. And he referred to the last paragraph in the company's written report that he said communicated exactly that. But in today's call he also indicated the divvy "is secure" for now, and by "now" he seemed to indicate one year and hopefully two. As I left the call, not one person had queued up to ask a question. Mr. Feltus must have known that, saying we could even ask about what the Red Sox should do if we wanted to. The operator was making one last offer so somebody may have come in later after I disconnected, but I doubt it. Generally seemed a relatively happy, and short, afternoon.
PHT over the years has been very, very good to me. That's an understatement. However, I took money off the table this morning and sold my wad at 18.36, having already locked in the July dividend when it went "ex" last week.
May get back in, but not until we get a little more clarity after Thursday afternoon's conference call from management. Here's my reasoning. We know that PHT has been "dipping into the kitty" of undistributed earnings to keep the dividend level, and the last conference calls have made it clear that while the dividends were level for now, that nothing is guaranteed to go on forever. Since the fund has been continuing to use undistributed earnings to pay the dividend since the last call, I am figuring there might be a slight change in tone after this week's call, maybe preparing us more or an (eventual) reduction in the monthly divvy.
If I am right, that could drive the share-price down and allow me to buy back in to this wonderfully managed fund at a better price. If I am wrong, I suppose the share-price could drift even higher while I am out of it. But how much higher can it go? As of yesterday's close, by my calculation it was already at a 30.5% premium over NAV. Anyway, that's what I did. We'll see. . . .
That's correct. And the conference calls I've listened to, literally for years, and a recent written report or two, have made it clear that nothing is forever. They're having to use part of the "kitty" to make the dividend payment so in the long run the current div level is certainly no sure thing. When one looks what's happened to interest rates, it's quite amazing it's lasted as long as it has.
I did note that their C.I.O.'s final comment on the conference call this morning -- right before they opened it up to questions from analysts -- was an upbeat comment about being optimistic to being able to continue attractive dividends. Obviously he didn't say what they would be -- and I am not trying to overanalyze what he said -- but I did find it at least a little notable that he ended on that note.