My High Dividend Stocks Blog http://myhighdividendstocks.posterous.com Most recent posts at My High Dividend Stocks Blog posterous.com Mon, 14 Nov 2011 16:20:26 -0800 Teekay Tankers continues to tank. Expect more dividend cuts. http://myhighdividendstocks.posterous.com/teekay-tankers-continues-to-tank-expect-more http://myhighdividendstocks.posterous.com/teekay-tankers-continues-to-tank-expect-more

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Teekay Tankers Ltd. (TNK)

Share price: $4.87

Shares: 61.88 million

Market capitalization: $300.10 million

This stock is SPECUATIVELY priced at almost 20 times average adjusted 3 year earnings

DIVIDEND RECORD

Teekay’s dividend record has been an a downward trend along with its stock price since 2008.

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Dividend: Teekay cut its dividend on November 9th, 2011 from $0.21 per quarter to $0.15 per quarter  (note: the new dividend doesn’t show on the graphic above)

Dividend Yield: 12.26% ($0.60 annual dividend / $4.87 share price)

Dividend payout ratio: 240% ($0.60 annual DIV / $0.25 average adjusted EPS)  I’m confident that TNK will continue to cut its dividend.

EARNING POWER $0.25 per share @ 61.88 million shares from 2009-2011E

Consider contrarian buying below $2.00 per share (8x its three year average adjusted earnings)

Consider value buying below $3.00 per share (12x its three year average adjusted earnings)

Consider speculative selling above $5.00 per share (20x its three year average adjusted earnings)

Teekay Tankers currently trades at 19.48 times its three year average adjusted earnings

            EPS                   Net inc.             Shares               Adj EPS

2006     $2.68                $40.2 M             -                       $0.64

2007     $2.76                $40.6 M             13.38 M             $0.66

2008     $2.03                $58.1 M             25.00 M             $0.94

2009     $1.28                $38.9 M             28.64 M             $0.63

2010     $0.37                $14.7 M             42.33 M             $0.24

2011E   ($0.11 E)           ($6.8 M)            61.88 M             ($0.12 E)

2011 Estimated earnings using a low number on Q4:

   Q1     $0.12                $7.1 M              57.39 M             $0.11

   Q2     $0.02                $1.4 M              61.88 M             $0.02

   Q3     ($0.28)             ($17.1 M)          61.88 M             ($0.28)

   Q4     $0.03 low E       $1.8 M              61.88 M             $0.03 low E

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Total     ($0.11 E)           ($6.8 M)            61.88 M             ($0.12 E)

Wall Street estimates according to Reuters financial website appear below.  I used the most conservative Low for the quarter ending Dec-11 to complete my estimate above.

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BALANCE SHEET

TNK’s balance sheet is not strong.  Teekay Tanker’s balance sheet has been shrinking for the past two quarters.  It will continue to erode as earnings decrease.

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Book value per share: $8.06

Price to book value ratio: 0.60 (good)

Current ratio: 1.57 (over 2.0 is good)

Quick ratio: 0.60 (over 1.0 is good)

CONCLUSION

Teekay Tankers has been cutting its dividend instead of growing it.  Its earning power is diminishing.  The third quarter’s disappoint results continue the earnings trend down below zero into losses.  And its balance sheet is eroding.  Don’t even consider buying until the stock price drops to the $2.00 to $3.00 range.  Oh yeah, and there is a huge tanker ship glut from the boom times that ended in 2007.

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DISCLOSURE

I don’t own Teekay Tankers Ltd.

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Tue, 20 Sep 2011 12:23:54 -0700 Teekay Tankers still not a buy at $5.97 (-44% since April 2011). http://myhighdividendstocks.posterous.com/teekay-tankers-still-not-a-buy-at-597-44-sinc http://myhighdividendstocks.posterous.com/teekay-tankers-still-not-a-buy-at-597-44-sinc

I wrote about Teekay Tankers (TNK) back on April 6th, 2011.  I said it was a speculatively priced high dividend stock.  My conclusion was this:

“I would wait to see what their earnings look like in 1Q and 2Q in 2011.  I haven’t really analyzed its dividend record, earnings and balance sheet.  I’ll take a look at it if the price drops below 20 times its 2 yr. average earning of $8.80.”

Read the rest here: http://www.myhighdividendstocks.com/high-dividend-stocks/are-these-two-oil-tanker-companies-high-dividend-stocks

Teekay Tankers is trading at $5.97 as I write this.  That is a drop of 44% since April 2011.  So I will make good on my promise to examine Teekay Tankers when it goes below $8.80.  The company has issued a lot of stock since April 2011, so my $8.80 price has to be adjusted downward as you will see below.

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The yield back then was reported as 11.59%, but I knew that Google Finance didn’t calculate the dividend yield correctly because of the recent dividend cut.  I estimated the dividend yield at 8.2% which still a high dividend stock.  It was trading at over 24 time its two year average earnings.  I usually use at least five years average earnings, but the tanker market has fundamentally changed for the worse in the past three years.

There is an enormous supply glut of oil tankers which have a depressing effect on tanker rental prices.  We will not see the high rental prices of 2008 in the distant future, so I’m throwing out the effects of the years 2006-2008.

Based in the Bahamas but incorporated in the Marshall Islands, Teekay Tankers owns and operates 11 medium-size oil tanker vessels. Previously a part of Teekay Corporation, TNK went public in December 2007. Although it's not a true limited partnership, Teekay Corporation retains a controlling interest in its spun-out subsidiary, and TNK intends to pay out nearly all of its distributable cash flow to shareholders.

Teekay Tankers (TNK)

Market price $5.97

Market cap: $369 million

Shares outstanding: 61.88 million

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Dividend Record: In one word – volatile.

Dividend: $0.21 quarterly, but TNK hasn’t paid the same quarterly dividend twice in the last five years.  Who knows what it will be next quarter?

Dividend yield: 14% ($0.84 annual dividend/$5.97 stock price)

Dividend payout ratio: 386% WARNING ($1.12 dividends last 12 months/$0.29 EPS last 12 months)  The dividends are being paid for by the issuance of new stock shares.  There will be either a massive dividend cut or another drop in the price of the stock as they issue more shares to finance the dividend.

Earning Power:  TNK has an average adjusted earning power of $0.38 EPS @ 61.88 million shares since 2009.

Teekay has more than double the number of outstanding shares in 2010 and it keeps issuing stock.  This highlights the importance of adjusting reported EPS for changes in capitalization.

 

EPS                Net inc.          Adj. EPS        Shares

2006               $2.68              $40.153 M     $0.64              -

2007               $2.76              $40.551 M     $0.66              13.384 M

2008               $2.03              $58.067 M     $0.94              25.000 M

2009               $1.28              $38.934 M     $0.63              28.644 M

2010               $0.37              $14.662 M     $0.24              42.330 M

2011Q1          $0.12             $7.09 M          $0.11              57.39 M

2011Q2          $0.02              $1.44 M          $0.02              61.88 M

Consider a value buy at or below $3.01 per share (8 times average adj. earning since 2009)

Consider an investment buy at or below $4.51 per share (12 times average adj. earnings since 2009)

Consider selling as it becomes speculatively priced at or above $7.52 per share (20 times average adj. earnings since 2009)

Balance Sheet: up mostly due to the issuance of shares of stock

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Book value per share: $9.88

Price to book value: 0.60 (very good)

Current ratio: 1.78 (over 2.0 is good)

Quick ratio: 1.62 (over 1.0 is good)

Financial leverage: 1.73 is low.  This is good

Debt to equity ratio: 0.66 is also good

Conclusion: Wait for a massive dividend cut or a massive price drop down to the $4.51 - $3.01 range.  Then monitor the technicals to spot near the bottom.

Disclosure: I don’t own Teekay Tankers.

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Thu, 14 Apr 2011 10:19:13 -0700 The practical significance of book value. Plus 15 book values of stocks mention on this blog. http://myhighdividendstocks.posterous.com/the-practical-significance-of-book-value-plus http://myhighdividendstocks.posterous.com/the-practical-significance-of-book-value-plus

There is no hard fast rule for price to book value ratios, but lower is definitely better.  I like the ratio too be less than 2.0.  Here is a list of many of the high dividend stocks mentioned on this blog with their most recent price, book value (BV)/share, Price/BV ratio, and dividend yield.  The results might surprise you.  Most of the book values per share are as of December 21st, 2010 unless otherwise noted.

Ticker              Price                BV/share         P/BV   Div. yield

=================================================

AGNC            $28.58             $24.24             1.18     19.51%

SB                   $8.26               $3.86               2.14     6.79%

SDRL              $34.42             $9.78               3.52     5.6%

TNH                $108.96           $11.35             9.6       4.94%

EXC                $39.97             $20.45             1.95     5.13%

FE                   $37.90             $28.02             1.35     5.99%

FRO                $22.59             $9.57               2.36     1.62%

MCD               $76.66             $13.55             5.66     3.27%

NGG               $48.80             $12.87 (ttm)    3.79     4.28%

PM                  $65.90             $1.90               34.68   4.01%

PCL                 $42.13             $8.47               4.97     3.96%

TNK                $10.15             $10.46             0.97     9.02%

VOD               $28.85             $17.06 (ttm)    1.69     3.18%

WIN                $12.41             $1.77               7.01     7.73%

T                      $30.27             $18.80             1.61     6.11%

Excelon (EXC), First Energy (FE), Teekay Tankers (TNK), and AT&T (T) warrant further examination for their high dividend yields and low price/book value ratios.

Philip Morris (PM) has an extremely high price/book value ratio which needs to be examined to make sure it’s not some weird artifact of how Google Finance and Morningstar display financial information.

Here is quick excerpt for Chapter 42 of Security Analysis 2nd edition on the practical significance of book value.

* * * * * * *

Practical Significance of Book Value. The book value of a common stock was originally the most important element in its financial exhibit. It was supposed to show “the value” of the shares in the same way as a merchant’s balance sheet shows him the value of his business. This idea has almost completely disappeared from the financial horizon. The value of a company’s assets as carried in its balance sheet has lost practically all its significance. This change arose from the fact, first, that the value of the fixed assets, as stated, frequently bore no relationship to the actual cost and, secondly, that in an even larger proportion of cases these values bore no relationship to the figure at which they would be sold or the figure which would be justified by the earnings. The practice of inflating the book value of the fixed property is giving way to the opposite artifice of cutting it down to nothing in order to avoid depreciation charges, but both have the same consequence of depriving the book-value figures of any real significance. It is a bit strange, like a quaint survival from the past, that the leading statistical services still maintain the old procedure of calculating the book value per share of common stock from many, perhaps most, balance sheets that they publish.

* * * * * * *

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Wed, 06 Apr 2011 11:50:28 -0700 Are these two oil tanker companies high dividend stocks? http://myhighdividendstocks.posterous.com/are-these-two-oil-tanker-companies-high-divid http://myhighdividendstocks.posterous.com/are-these-two-oil-tanker-companies-high-divid

If you use Google Finance’s basic stock screener to find high dividend stocks, then you might have noticed two oil tanker stocks that appear to be high yielders.  Frontline (FRO) and Teekay Tankers (TNK) appear to yield 7.7% and 11.59% respectively.  But this really isn’t the case.  I have taken a cursory look at both of these stocks and now I will share what I found with you.

Frontline (FRO)  POSSIBLE INVESTMENT at this time, but meager dividend now.

Market price: $24.08

Total shares: 77.86 M

Dividend yield: according to google finance 7.7%, but its computations can be unreliable when a company lowers its dividend.  Frontline cut its dividend to $0.10 per quarter.  The last four dividend payments were: $0.25, $0.75, $0.75, $0.25.  I think the estimated yield is probably more like 1.6% ($0.10 x 4 = $0.40; $0.40/$24.08 = 0.0166 or 1.6%).

            EPS       Net inc.             Adj. EPS

2006     $6.90    $519 M              $6.63

2007     $7.62    $570 M              $7.32

2008     $9.14    $699 M              $8.98

2009     $1.32    $103 M              $1.32

2010     $2.07    $161 M              $2.06

The 5 yr. average earnings were $5.26 per share.  12 times 5 yr. average earnings equals $63.12.  20 times 5 yr. average earnings equals $105.20.  The market price of Frontline is only $24.08.  It is trading at only 4.6 time its 5 yr. average earnings, but tanker rental prices are down over 80% from 2006-2008.  Tanker prices will not rebound to 2006-2008 prices.  There are too many tankers with no cargo due to the global recession.

If we look at the 2 year average instead, then a different valuation becomes clear.  The 2 yr. average earnings are $1.70 per share.  12 times 2 yr. average earnings equals $20.40.  20 time 2 yr. average earnings equals $34.00.  Frontline is trading at 17 times its 2 yr. average earnings.

Frontline appears to be close to a possible value purchase below $20.40.  I would wait to see what their earnings look like in 1Q and 2Q in 2011.  I haven’t really analyzed its dividend record, earnings and balance sheet.  I’ll take a look at it if the price drops below $20.40.

Teekay Tankers (TNK) SPECULATIVE HIGH YIELDER now

Market price: $10.75

Total shares: 77.86 M

Dividend yield: according to google finance 11.59%, but its computations can be unreliable when a company lowers its dividend.  Teekay Tankers has cut its dividend to $0.22 per quarter.  The last four dividend payments were: $0.31, $0.34, $0.37, $0.26.  I think the estimated yield is probably more like 8.2% ($0.22 x 4 = $0.88; $0.88/$10.75 = 0.0818 or 8.2%).

Teekay has more than double the number of outstanding shares in 2010.  This highlights the importance of adjusting reported EPS for changes in capitalization.

            EPS       Net inc.             Adj. EPS

2006     $2.68    $40.153 M         $0.66

2007     $2.76    $40.551 M         $0.67

2008     $2.03    $58.067 M         $0.96

2009     $1.28    $38.934 M         $0.64

2010     $0.37    $14.662 M         $0.24

The 5 yr. average earnings were $0.63 per share.  12 times 5 yr. average earnings equals $7.56.  20 times 5 yr. average earnings equals $12.60.  The market price of Frontline is only $10.75.  It is trading at 17 times its 5 yr. average earnings, but tanker rental prices are down over 80% from 2006-2008.  Tanker prices will not rebound to 2006-2008 prices.  There are too many tankers with no cargo due to the global recession.

If we look at the 2 year average instead, then a different valuation becomes clear.  The 2 yr. average earnings are $0.44 per share.  12 times 2 yr. average earnings equals $5.28.  20 time 2 yr. average earnings equals $8.80.  Teekay appears to be a speculative purchase above $8.80.  It is currently trading at 24.4 times it 2 yr. average earnings.

I would wait to see what their earnings look like in 1Q and 2Q in 2011.  I haven’t really analyzed its dividend record, earnings and balance sheet.  I’ll take a look at it if the price drops below 20 times its 2 yr. average earning of $8.80.

Jason Brizic
Torch Technologies, Inc.
Ground Test Analyst
MDA/DEJ (Engineering Test Analysis)
(719) 721-8359
jason.brizic.ctr@mda.mil
jason.brizic.ctr@mda.smil.mil

“Freedom consists of a lack of desire to control others” – Harry Browne

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