Your discussion on Sept. 17, 2010 has proven bang on. The board has reduced the dividend and the MD&A warns of another year of hanging on.
My dividend yield with the reduced dividend is about 9% pre-tax.
The downward trend began in 2005 and I don't know if it was a function of the 2002 merger with ICG.
I'm wondering if its business results and downward market pricing is a management problem or just a sector problem? I.e., bad company (time to bail) or bad economy (expect a return to shareholder reward?)
Thank you very much.
I have posted on Superior Plus Corp. three times in total since Sept. 17, 2010. This will be the fourth time I have posted on the company because it has provided a valuable instructional tool.
See the last three postings by clicking on the below:
The last time I analyzed SPB, on Jan. 24, 2011, I made note of two features. A double-bottom that signaled a reversal of the downtrend and the flex point surrounding the quarterly results scheduled for release on Feb. 17, 2011. As you mentioned the board cut the dividend on Feb. 17, 2011 and tanked the advanced. The charts will help answer some of your questions and perhaps give us some idea of the future direction for the stock.
The three-year chart for Suburban Propane Partners LP I believe answers your questions about the quality of management and the health of the propane sector. Clearly someone is creating wealth in the segment but it's not SPB.
The three-year chart for SPB depicts the double-bottom that was identified in the January 24, 2011 report I posted for Ed. The stock continued in an uptrend from the close on Jan. 24 of $11.72 to the peak high of $12.40 for a 5.8% gain. The fourth-quarter results reported on Feb. 17, 2011 stopped the advance in its tracks on the news that the board reduced the dividend.
The six-month chart illustrates a classic example of what happens when management cuts a dividend. Nothing good. The close-to-close change represents a 10.48% loss. It was even worse for investors who bailed at the panic lows of $10.50.
When it comes to what to do with SPB you have to ask yourself can you afford to buy and hold to earn a dividend or should you trade this one for income?
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