GNE - Genesis Energy

[Zaphod]

Fair enough but GNE have a reasonable track record with their EBITDA forecasts, (obviously massive hydrology shocks excepted), and notwithstanding the effects on certain industries by Covid 19 they are forecasting a significant uplift in earnings this year. In terms of safe pretty high defensive yield I am struggling to find anything better but have an open mind for other idea's if anyone has any ?

I'm definitely not arguing the relative merits of GNE, but just though I'd add that I do see some sector-wide risk due to the long term effects of the pandemic on commercial and industrial demand.

[RTM]

[COLOR="#0000FF"] For the life of me I cannot see the point in taking a term deposit at say 1.4% which after tax will generate about 1% so taking the average inflation in the last few years of 2% you're getting a negative real interest rate of -1%.

Been mulling this over for a bit Beagle....as have a bit to much cash at the moment. However have decided not to chase yield in the market right now, going to suck it up and get my 1.4% at Kiwibank.
- There has to be quite a bit of uncertainty in the electricity market at the moment. The power companies are already >20% of my portfolio...I think that's enough.
- The market is high overall, and we are not through the problems that COVID is creating for the world and NZ as yet. I see more dips in the future, maybe significant before this thing resolves itself.

So it will be mostly sitting on my hands and some opportunistic buying for me as opportunities present themselves.

As an aside, we rely on dividends a lot for our income, our reduced income from them has reduced our overall income by about 2% so far...waiting anxiously on the Heartland result.
So far so good.

[Nor]

A relatively small share market correction will take many years of dividends to make up. Can't count on the market rebounding everytime.

[Beagle]

Been mulling this over for a bit Beagle....as have a bit to much cash at the moment. However have decided not to chase yield in the market right now, going to suck it up and get my 1.4% at Kiwibank.
- There has to be quite a bit of uncertainty in the electricity market at the moment. The power companies are already >20% of my portfolio...I think that's enough.
- The market is high overall, and we are not through the problems that COVID is creating for the world and NZ as yet. I see more dips in the future, maybe significant before this thing resolves itself.

So it will be mostly sitting on my hands and some opportunistic buying for me as opportunities present themselves.

As an aside, we rely on dividends a lot for our income, our reduced income from them has reduced our overall income by about 2% so far...waiting anxiously on the Heartland result.
So far so good.

You're well positioned already
I topped up a few more GNE this morning. By my calculations on a forward basis GNE is still yielding 7.5% gross at $3.06 (if ones nets back the dividend due shortly off their purchase price). I am working on 17.4 cps in annual divvies for FY21, (broker targets have them paying 18.0 cps in annual dividends in a few years) and 80% imputation rate. I have a price target of $3.73, (have been as high as $3.77 in the last year in a higher interest rate environment), which would still give them a 6.0% yield and I think that's going to be highly attractive in a negative interest rate world.

I believe the size of the tsunami of money that's going to be looking for safe yield in the market is drastically underestimated by almost everyone on here, (probably including myself)...another $3.2 Billion to be released with the wind-up of bonus bonds announced today is just the tip of the iceberg.

[Davexl]

You're well positioned already
I topped up a few more GNE this morning. By my calculations on a forward basis GNE is still yielding 7.5% gross at $3.06 (if ones nets back the dividend due shortly off their purchase price). I am working on 17.4 cps in annual divvies for FY21, (broker targets have them paying 18.0 cps in annual dividends in a few years) and 80% imputation rate. I have a price target of $3.73, (have been as high as $3.77 in the last year in a higher interest rate environment), which would still give them a 6.0% yield and I think that's going to be highly attractive in a negative interest rate world.

I believe the size of the tsunami of money that's going to be looking for safe yield in the market is drastically underestimated by almost everyone on here, (probably including myself)...another $3.2 Billion to be released with the wind-up of bonus bonds announced today is just the tip of the iceberg.

Bought a block of Genesis this morning also, just before the NZX crashed again...
Find your target price of $3.77 very encouraging Beagle. Can you explain where this comes from, considering all the uncertainty with Tiwai etc?
Is is based on maintaining a particular P/E level? Thanks in advance.

[Beagle]

I'm using a dividend valuation model to get that figure. Using a 0.5% risk free Govt stock rate and 5.5% risk premium for Genesis. I think a gross yield of 6% is extremely attractive for a Gentailier in the negative interest rate world into which we're headed in 2021 and where we are likely to stay for several years.

I'm aware of one broker having a ~ $460m EBITDA forecast for FY24. GEN think they will be relatively unaffected by Tiwai and the major reserve upgrade at Kupe should see this valuable part of their business (circa 30%) have a viable life for well over 20 years.

[see weed]

You're well positioned already
I topped up a few more GNE this morning. By my calculations on a forward basis GNE is still yielding 7.5% gross at $3.06 (if ones nets back the dividend due shortly off their purchase price). I am working on 17.4 cps in annual divvies for FY21, (broker targets have them paying 18.0 cps in annual dividends in a few years) and 80% imputation rate. I have a price target of $3.73, (have been as high as $3.77 in the last year in a higher interest rate environment), which would still give them a 6.0% yield and I think that's going to be highly attractive in a negative interest rate world.

I believe the size of the tsunami of money that's going to be looking for safe yield in the market is drastically underestimated by almost everyone on here, (probably including myself)...another $3.2 Billion to be released with the wind-up of bonus bonds announced today is just the tip of the iceberg.

From Beagle 26/8/20. That was the day CEN went ex div. That was the day I started buying into GNE for the div. Haven't reached my target yet but still have 4 business days left to buy before GNE ex div.

[Beagle]

$3.01 ex divvy gives 7.5% gross yield, (assuming 17.5 cps divvies in FY21 and 80% imputation rate).

[BigBob]

$3.01 ex divvy gives 7.5% gross yield, (assuming 17.5 cps divvies in FY21 and 80% imputation rate).

or well over 12% at my $1.73 average buy....

[Beagle]

or well over 12% at my $1.73 average buy....

17.5 / 0.776 (.776 is the figure to use with 80% imputation) = 22.5515 cps gross forecast dividends for FY21.
22.5515 / 173 = 13.03% gross. Well done to you