RE: DanielH8 May 2019 01:49
AndsoitBegins. & others.. I never agreed with the idea a high divi was good if the sp falls by more, & if you read any of my posts a year or so ago you would see. I also often question'd how free cash flow is all that matters to pay a divi. If free cash flow is supported by debt, then it is not free. There were many who said a falling share price is good or dosn't matter but I always disagreed. So the big ? is why didn't I sell? Answer. I gambled that profits would rise so as to cover the divi & support the share price as most brokers predicted. Of course if we had listened to mighty last call then we all would have sold, but we all thought you where a complete nutcase, & still do. I think the current vod sp is fair or undervalued, but only based on rising profits from liberty tie up , but of course it is a big gamble. I am a gambler, & am prepared to take the risk. That's what the stock market is about, unless you have 57 inputs! (last call) Not as someone suggested earlier, like taking candy from a baby. As for timing, well 1st prize goes to you (last call)for stating (as basil faulty would say) the bleeding obvious. Oh ,so why didn't you short just before the wall st crash. . So the big ? now is can liberty & others give profits enough to pay off the big % debt, & still pay the divi? This is all bearing in mind, that the only reason the vod divi yeild is 9% is because the sp is 1.40. If the sp was £2 as some predict its true value, then it would about 6%. Just think about it. To work out if a divi yield is affordable, forget free cash flow, forget the sp. Just look at profits over a future period minus divi,s . minus interest on debt that can be covered by cash. If the vod sp is £2, Why do you think the divi is more affordable than if if is 1.40. unless the sp is directly connected to asset value. which it is not. Divi affordability has nothing to do with sp price or just free cash flow, but a combination debt, free cash flow now & future profits.