It is at times like this shareholders need to remember that PGW is a cyclical share, not a growth share in the conventional sense. PGW in its current form came into being in CY2006. Here is the dividend record since then.
|
Interim Dividend |
Final Dividend |
2006 |
1.88c |
2.82c |
2007 |
1.88c |
3.76c |
2008 |
2.35c |
5.18c |
2009 |
2.35c |
Nil |
2010 |
Nil |
Nil |
2011 |
Nil |
Nil |
2012 |
Nil |
Nil |
2013 |
2.2c |
1.0c |
2014 |
2.0c |
3.5c |
The dividends in the pre 2010 part of the table have been adjusted for the 9:8 cash issue that took place.
9 new shares issued for every 8 held means that these earlier dividends have to be multiplied by a factor of:
8/(8+9) = 8/17
to gain a comparative measure with each shares on issue today.
I average all that out to a calendar year dividend of 3.21c/share (net). Based on today's closing price of 47.5c this is a net yield over the business cycle of:
3.21/47.5 = 6.76%
To satisfy Roger, that equates to 6.76%/0.72 = 9.39% (gross) ("Companies can't impute any more than the company tax rate of 28%").
For mere taxpayers such as myself, I would be earning (net): 9.39% x 0.7 = 6.57%. (I hope Roger will correct me if I have that wrong!)
These figures strike me as about right (similar in yield to the DPC bonds I have applied for). I would say as an income investor you might look at accumulating PGW on any weakness. But it is no longer cheap enough to chase as a bargain. Having said this, we are still in a favourable part of the farming cycle. So 48-50c may not be out of the question soon. Just don't bank on the current level of dividend being permanent.
SNOOPY
discl: have held PGW since it was created