Companies can’t normally afford to be paying that much in dividends. After all, if things were going well, the stock price would rise and the yield would shrink as a result.
However, it is a little distorted as the company issued a $1 dividend at the end of the year that included $0.30 which was as a result of gains from the sale of assets during the year. Without that, the dividend was $2, yielding around 6.8% based on the price back in December. Based on today’s price, the yield is as high as 8%.
That’s 85% of the cash that the company has generated being paid out as dividends, and while that may seem high, that could prove to be sustainable, especially without much of a need for capital expenditures.
With the stock trading below book value and at 18 times its earnings, it’s also a good value stock for investors to add to their portfolios.
However, it has started to rally in the past month, rising more than 7% and the stock could be a great deal for both dividend and value investors today.