"Mercury’s dividend policy is to make distributions with a pay-out ratio of 70% to 85% of Free Cash Flow on average over time"
They have been paying 100% of late, so is that a signal for dividend reduction going forwards?
"The Board will seek to maintain consistency on a dividend per share basis from year to year while maintaining the dividend pay-out ratio on average over time."
Or are the board assuming a rise in earnings, so that the absolute value of the dividend won't be reduced?
If you believe in a 'steady state' power market over the next few years, then I would say the 'actual payout' verses the 'company policy payout' is definite evidence that the dividend yield was pumped over the forecast period following on from the float.
I had a call from Mercury on Friday.
"We are ringing people." they said. "We think you are paying too much for your power" they said. Now I am officially a 'low power user', but nevertheless the bill starts to get up over winter. So what to do? Firstly they offered to discount my daily charge down to just over 28c. Great! But then when I went through the charged rates I was paying the promised savings seemed difficult to match. In the end the guy on the phone said
"Actually you are on pretty good rates, so we won't be making you a switching offer."
First time that has happened in my dealings with power companies that have approached me! But good to see from a 'shareholder perspective' that they won't be chasing business at any price. No doubt my responses provided some nice market intelligence information for Mercury too, without having to pay workers to 'tramp the streets' to get it.!
SNOOPY