rapidbenz

http://www.americancapital.com/news/newsreleases/2008/pr20080213.html
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    • Fri Jul 11th 17:23 PM | Rating: 0 0
      Commented on:
      Dividend Yields Soar
      OneRichOne is quite correct; dividends are based on earnings and profitability. The lowered stock price just gives investors a greater ROE opportunity regardless of potential for equity gains, as well as a healthy hedge against further erosion.

      In ACAS' Q1 results and FY08 dividend estimates released on 2/13/08, CEO Malkin Wilkis stated, “Our performance in 2007 was outstanding, particularly in light of the credit crisis,” said Malon Wilkus, Chairman, President and CEO. “We produced $4.65 of Realized Earnings per share which covered our dividend of $3.72 per share by 125%. The excess earnings, in part, allowed us to roll over $361 million of taxable income into 2008 to pay 2008 dividends. During the past ten years, I have answered investors' questions concerning how we would perform in a recession and credit crisis by stating that we would continue to perform well in a “steady state” mode. This year, we may have the opportunity to prove ourselves in such an environment. Our plan for the year includes a recession, no growth to our balance sheet and other steady state assumptions. Based on these assumptions, we forecast that we will increase our 2008 dividends 13% to $4.19 per share, and we forecast that we will roll over to 2009 more than $500 million of taxable income to pay 2009 dividends, a 39% increase in the amount rolled over into 2008 from 2007. Beyond this outstanding steady state performance, there are tremendous opportunities to make investments in dramatically under valued assets. If we were to raise additional attractively priced capital in 2008, we have the potential of investing in some of the best investment opportunities we’ve seen which could improve on these forecasts.”
      (This PR can be read via the URL I included in "Website").

      The 2008 dividend estimate included in this press release announced the Q1 dividend of $1.01 / share, with the balance of 2008 forecast as:
      $1.03 for Q2 2008, 13% increase over Q2 2007;
      $1.05 for Q3 2008, 14% increase over Q3 2007; and
      $1.10 for Q4 2008, 10% increase over Q4 2007.

      Next earnings announcement is 8/4 so don't miss the ex-div for $1.05 / share!

      Since the 2007 taxable income rollover has already funded these dividends, even with the stated flat-line expectation through FY08, I cannot think of many other high-yield, low risk investments that float my boat.

      A low tide does sink all boats, and the ~54% ACAS share value decline in the last eight months attests to the strength of the tar and feathers they were splattered with in the overall meltown of all things "Financial".

      In ACAS' case, this collateral damage didn't hit any vital organs or blast any serious holes in the hull. Things look pretty buoyant to me, so I'm willing to bet she doesn't get stuck in the muck with the also-ran CDO / CLO subprime junkies when the tide comes back in.


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