GNE - Genesis Energy

[robbo24]

I borrowed 200k against my house and bought 92500 at $2.16. I fixed the amount at 5.89% for 3 years and the bank was also nice enough to give me $1500 cash for taking the loan out.

Because the dividend is fully imputed, does that mean I can claim any interest back on the loan? I'll check with an accountant.

At the end of the 3 years, what are your target gains in terms of divvies and capital gains in light of the interest you're paying?



I'm just flicking through the risks section of the GNE prospectus for entertainment.

[Bobdn]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%

[bull....]

Those are net yields mate. I don't know about the others but in Genesis case its fully imputed so you need to divide the net yield by 0.72 to account for the 28% full imputation credit attached so I get a gross yield of 10.19% at $2.18. Even at closing price today of $2.21 based on a gross dividend of 22.22 cents incl of imputation credits that's still over 10% (10.05%) and that's only paying out 80% of forecasted profit and there's no need to build new generation capacity for many years. Plenty of rumours in the market about capacity for special dividends and why not !! We know the government like special divvy's, see recent example of whopping AIR special divvy of 10 cps, that was really tasty, what chance of a repeat with GNE

Roger gross yields above mean dividends should easliy cover your loan

[Harvey Specter]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%

One potential issue is that imputation credits are not refundable. So if you have no other taxable income, the imputation credits may be carried forward, not refunded.

[brend]

lets hope hes holding the shares in an individual name with other income (PAYE), not a trust with no other income :/

[Bobdn]

That describes me exactly. I could have bought a rental property I suppose but at least this way I get a similar return but don't have to worry about tenants turning the property into a meth house.

[couta1]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%

Your net interest will be 3.95% after you take 33% off 5.89% assuming your on the top tax rate so plenty of fat left over with 3.45% to spare.

[Bobdn]

Cool, thanks for the info Couta

[Beagle]

Roger gross yields above mean dividends should easliy cover your loan

Not my loan, (I'm mortgage free) but yes Bobdn should be well covered.

One potential issue is that imputation credits are not refundable. So if you have no other taxable income, the imputation credits may be carried forward, not refunded.

Absolutely correct.

That describes me exactly. I could have bought a rental property I suppose but at least this way I get a similar return but don't have to worry about tenants turning the property into a meth house.

Dead right but there's no harm in spreading it around a bit mate. That's another advantage of investing in shares as opposed to placing your trust in some stranger renting one's grossly over-priced house. I think HNZ has a similar gross divvy this year with better prospects for dividend and SP growth IMHO. I am tempted to gear-up on HNZ but probably won't because I'm a conservative old number cruncher

[Harvey Specter]

Dead right but there's no harm in spreading it around a bit mate. That's another advantage of investing in shares as opposed to placing your trust in some stranger renting one's grossly over-priced house. I think HNZ has a similar gross divvy this year with better prospects for dividend and SP growth IMHO. I am tempted to gear-up on HNZ but probably won't because I'm a conservative old number cruncher

I think thats good advice. There is a few good yeild stocks which would make this a good strategy, HNZ being one of them. I wouldn't put all my eggs in one basket on a leveraged investment - you might end up with Couta and end up holding onto Chorus :0