smurphny

Ten Top Value Traps with Unreasonably High Dividends

Selling got overdone on many of the oil/gas trusts. At current prices, even with expectation that distribution will fluctuate, these represent good values. Crude is also nearer bottom than top. Crude at 10=depression and even cash will not be safe unless it's in gold under your bed. Barring this nightmare scenario , it's probably time to start adding these before they DO get to a point of higher risk. The "trap" may be in waiting until too late because when the general market turns up, which will precede the recovery, the value of these will soar.

Citigroup Forecasts High Distribution Cuts By Canadian Royalty Trusts

The real issue with the CANROYs and Amer. oil trusts is the price of oil and the potential decreases in share price. Dividends are a side story. The bear market in crude is not close to being over yet. Irrationality may bring oil down to $20/brl, as far on the downside as it went on the upside. That will be the time to get back into these trusts. If oil plummets further, Canroys may all trade in the single digits for some time. Remember, with the concept of "cheap" : from $5 to $2.50 is a 50% loss. Hold for now because there will be a tremendous opportunity later. I think there WILL be clear signs that the bottom in crude has been reached. Look for news hints that supply is dwindling, refining capacity has been hurt by abandoning new projects (HTE), or reserves are leveling off. If OPEC suddenly comes up with a way for members to comply with reasonable quotas would be another signal. As with any investment, confidence is needed. Right now there is none and no clarity. The oil-driven economy of the world is not going away any time soon but for now, the bear is alive and well.

Eight Stocks Going Ex-Dividend in October

Have been trying to find something wrong with HTE but have not found anything to warrant the ridiculous sell-off (of all the CANROYs). From what I can gather, it is primarily forced selling from hedge funds and mutual funds and has less to do with the future price of oil or fundamentals. Trading at 1/2 book, hedged far enough out to keep dividend, very steady payout with a good plan to address the 2011 transition. Just bought more at $7.30. I just keep thinking: "If it's too good to be true..." Even if oil really tanks and dividend is halved, it's still a great yield. Upside share price potential from these levels must be better than down in the long run.


On Oct 07 07:18 AM b3rkut wrote:

> thanx murphy, i didnt realize it was .30 per *month*.
>
> What's ur opinion on the long-term dividend stability and the solidity
> of it's financials long-term?

Eight Stocks Going Ex-Dividend in October

.30*12=3.60/11.76(curr... price)=30.6%


On Oct 06 10:33 AM b3rkut wrote:

> I'm a bit confused: HTE's website says the dividend is only $0.30,
> so that works out to a whole lot less than a 19% yield as stated
> in this article (and also on the stock charts on Seekingalpha and
> Yahoo finance)!
>
> So what gives?

Can the Dow and S&P Last 15 Rounds?

Those high dividend rates look tempting but there is also considerable danger. I have traded these things for years. First of all, the stock value WILL float up and down with the tide which is most certainly going out. There is little evidence that the dividend rate will positively affect the stock price.

Second, in this extremely volatile and fickle commodities market, it is impossible to count on the dividend rate staying high. The dividends will fluctuate along with the price of crude. When dividend cuts occur, as they must, investors will run like lemmings off the cliff and drastically cut the share price.

Third, no one knows what will happen as we get closer to the Can. tax gouge that is scheduled for 2011. It is impossible to tell when investors will start pulling out (if this is not already happening).

There are many uncertainties and it makes no sense to get a hefty dividend if it is all lost in share prices. Maybe when this very erratic and confused market stabilizes it will be possible to trust the trusts will provide a decent overall return. There is an old and mostly forgotten investing principle which still holds true for high yields like these: RISK=REWARD.