Originally Posted by
Snoopy
The problem with that reasoning from my POV, Fish, is that some investors have an unrealistic attachment to this 8c + 8c dividend with full imputation credits.
Ponder this: How can a company with a projected total tax paid profit of 8.5cps to 9.5 cps, pay out a dividend of 16cps with full imputation credits?
Answer: they can't unless some of those imputation credits are hanging around on the balance sheet already.
Once those imputation credits are gone, they can only be replaced by future tax paid from real earnings. So short of giving you your own capital back in the guise of a dividend (paying a dividend from capital will just see your capital reduced by the amount of withholding tax GNE deducts from that dividend and will not give you any imputation credits) my conclusion is that dividends will be substantially lower from FY2016 and not fully imputed.
Personally, even given the above, I see buying GNE as just worthwhile. But I am in the market for a bit more of a bargain than an implied yield of just over 6%. So I regard GNE as a hold at today's prices. There are better bargains to be had among some other gentailers at today's GNE prices IMO.
SNOOPY