Originally Posted by
SparkyTheClown
Well, this is a utility stock, largely coveted for its dividend.
A fair dividend for a utility stock is arguably between 8.5-9.5% gross (at least, thats how I feel. Some utilities have lesser yield).
So if we divide the fully imputed 25.5c dividend by 0.72 to get the gross yield, and then divide by 0.095/0.085 for the price you would have to pay for a yield of that amount, you get a price band of $3.72- $4.16.
However - the 25.5c dividend is likely to drop a little two years out if the UBA pricing is amended down slightly. Perhaps down to 21.5c. So over five years we would have an average dividend of 23.1c. Call it 23c.
So 23c / 0.72, and then divided by 0.085 and/or 0.095 gives you a band of $3.36 - $3.76. A mid point is $3.56.
I appreciate this is largely arbitrary and capricious, but I have outlined my past thoughts extensively on the yield being irrational for CNU in this thread. Obviously, my view is no better than anyone else's but I think it's a fair set of assumptions and expectations.