GNE - Genesis Energy

[Beagle]

.... as well as telling us the bad news after you've sold

I take some consolation you've still got GNE

Was reading today that the wholesale power futures are pricing in a high probability of a deal with Rio Tinto.
Feeling a bit more comfortable with your term deposit now at $3.045 ?...possibly $3.450 sometime in 2021 with interest rates at zero ?

I still reckon you won’t be holding WHS by years end.

Reckon you'll be wrong and I think WHS will turn into a reliable dividend payer again at circa 16 cps per annum fully imputed = 10% gross yield. I can't see any reason to sell....actually still thinking of doubling down

[nztx]

Was reading today that the wholesale power futures are pricing in a high probability of a deal with Rio Tinto.
Feeling a bit more comfortable with your term deposit now at $3.045 ?...possibly $3.450 sometime in 2021 with interest rates at zero ?


Reckon you'll be wrong and I think WHS will turn into a reliable dividend payer again at circa 16 cps per annum fully imputed = 10% gross yield. I can't see any reason to sell....actually still thinking of doubling down

Seconded .. recently traded GNE in for WHS

[Beagle]

Well...that WHS didn't work out to well...nbever mind. Time to update the "term deposit" rate, (seeing as the BNZ have updated there's and people can earn a "whopping" maximum of 1.05% per annum before tax), and with the risk of an open banking resolution and the risk of the BNZ itself. WOW...that's breathtakingly miserable for the risk involved.

Anyway...it would seem we are on our way to $3.45 as suggested above so that's good. Is it too late to get some decent return from a Gentailier ?
Lets have a look. Assuming 17.5 cps for FY21 and the same 80% imputation as it has been for years that's 17.5 / 0.776 = 22.55 cps gross and on a share price of a few minutes ago of $3.20 that's
22.55 / 320 = 7.04% Gross Yield But wait there's more. If you sign up to the dividend reinvestment plan and take shares in lieu of dividend you get a 2.5% discount so your effective yield is 7.04% / 0.975 =7.22% Gross Yield...Hmmm

[winner69]

Well...that WHS didn't work out to well...nbever mind. Time to update the "term deposit" rate, (seeing as the BNZ have updated there's and people can earn a "whopping" maximum of 1.05% per annum before tax), and with the risk of an open banking resolution and the risk of the BNZ itself. WOW...that's breathtakingly miserable for the risk involved.

Anyway...it would seem we are on our way to $3.45 as suggested above so that's good. Is it too late to get some decent return from a Gentailier ?
Lets have a look. Assuming 17.5 cps for FY21 and the same 80% imputation as it has been for years that's 17.5 / 0.776 = 22.55 cps gross and on a share price of a few minutes ago of $3.20 that's
22.55 / 320 = 7.04% Gross Yield But wait there's more. If you sign up to the dividend reinvestment plan and take shares in lieu of dividend you get a 2.5% discount so your effective yield is 7.04% / 0.975 =7.22% Gross Yield...Hmmm

My abacus gives same yelds than your abacus

ts pretty good eh .....and even better if share price goes to $3.45 plus

Cool eh

[Beagle]

My abacus gives same yelds than your abacus

ts pretty good eh .....and even better if share price goes to $3.45 plus

Cool eh

Sure is mate. I have another term deposit maturing with Heartland next week. They wanted me to roll it over at their special rate of 1.5%...have a guess what I told them lol

[winner69]

Save me before the man in the white coat comes and gets me - I've developed a morbid fascination with these quasi bond type high yielding stocks like GNE.

I dont know what it all means but my database throws up this -

• The GNE dividend yield (net) over the last few years has generally been around 4.7% more than the 10 year Govt bond rate (Currently 5.3% but reverting to that average from a brief spike in March 2020). I suppose this spread a measure of the risk holding GNE?
  
• so not surprisingly the GNE dividend yield has fallen in line with declining interest rates
• The GNE yield was over 8% in 2015 and has been trending down since
• We should not overlook that as interest rates fall so does expected overall total returns from equities - we are happy getting less because less is better than almost nothing
• The 10 year govt bond rate is now zero (or nearly there)
• Does this mean the historical spread of 4.7% noted above will shrink further? Would this imply that yield seekers are prepared to take on 'added risk'?
• How low can the GNE dividend yield go - after all it's been trending down for years.
• What impact does this have on the GNE share price in the future - bearing in mind it is basically the face value of a quasi bond.

Conclusion I've come to is that one needs to act early (like soon) if they want to get current yields -- TRINA or is TINA will have a field day in case of FOMO.

But then again one needs to consider where the share price (capital) might be in a year or two.

And I've done all this without even really looking at how Genesis makes money - all I see is that their preferred measure of profitability EBITDAF trend doesn't look too flash - the financial performance doesn't seem to be the driver of the GNE share price, its that divie yield.

Even though i've got this quasi bond as a substitute for a 3 year year term deposit i don't actually see myself lasting the 3 years - i expect (and hope) that I'll have to take/lock in some capital gains

Must go now - i hear the man in the white coat coming up the front steps

[Beagle]

Save me before the man in the white coat comes and gets me - I've developed a morbid fascination with these quasi bond type high yielding stocks like GNE. You're not alone lol

I dont know what it all means but my database throws up this -

• The GNE dividend yield (net) over the last few years has generally been around 4.7% more than the 10 year Govt bond rate (Currently 5.3% but reverting to that average from a brief spike in March 2020). I suppose this spread a measure of the risk holding GNE? Reversion to average suggests more short term upside
  
• so not surprisingly the GNE dividend yield has fallen in line with declining interest rates Agree, no surprises there
• The GNE yield was over 8% in 2015 and has been trending down since
• We should not overlook that as interest rates fall so does expected overall total returns from equities - we are happy getting less because less is better than almost nothing Agree 100%
• The 10 year govt bond rate is now zero (or nearly there) Was just on 0.5% this week)
• Does this mean the historical spread of 4.7% noted above will shrink further? Would this imply that yield seekers are prepared to take on 'added risk'? Yes, the search for yield is getting really desperate. Its funny how being offered just ~ 1% on term deposit has a way of sharpening one's focus ! Its all about TRINA
• How low can the GNE dividend yield go - after all it's been trending down for years. 5% gross yield in my opinion, currently 6.8% gross which implies significant upside.
• What impact does this have on the GNE share price in the future - bearing in mind it is basically the face value of a quasi bond. Plenty of upside to come in my opinion, it was in the $3.70's last year when interest rates were substantially higher. Contact probably going into the MSCI index could see that significantly rerated and then we might see some people switching into GNE for its better yield...kind of like switching power companies for cheaper electricity in reverse

Conclusion I've come to is that one needs to act early (like soon) if they want to get current yields -- TRINA or is TINA will have a field day in case of FOMO. This is why dividend yield stocks have been performing very strongly in recent weeks on the NZX...and I am very confident we are not done yet by any means

But then again one needs to consider where the share price (capital) might be in a year or two. The company's own forecast is for EBITDA to grow nicely this year to over $400m.
I have seen a summary of a broker forecast with EBITDA growing to just over $450m a few years hence and dividends growing to 18 cps so any valuation needs to embrace the long term trend of the company steadily increasing its dividend payout

And I've done all this without even really looking at how Genesis makes money - all I see is that their preferred measure of profitability EBITDAF trend doesn't look too flash - the financial performance doesn't seem to be the driver of the GNE share price, its that divie yield. It looks sound from where I see it. Long term Huntley will be replaced with wind

Even though i've got this quasi bond as a substitute for a 3 year year term deposit i don't actually see myself lasting the 3 years - i expect (and hope) that I'll have to take/lock in some capital gains I see no reason to think about selling but who knows what the future holds eh, I said the same thing about the Warehouse last week lol

Must go now - i hear the man in the white coat coming up the front steps

LOL I love your dry sense of humor. Winner at his best !

[Beagle]

I think you'll be safe from the men in the white coats down at Franz Joseph mate...they probably don't know how to get there but I'm expecting them to turn up this evening at my place because my morbid fascination with these quasi bond thingies is getting the better of me too. Since making this "term deposit" in Sept I'm up 12.5% in just on a month for an annualized return of 150%.

Hmmm...I can't help wondering what my BNZ relationship manager would make of that since they're offering a "stellar" 1% per annum on their term deposits

[peat]

I think you'll be safe from the men in the white coats down at Franz Joseph mate...they probably don't know how to get there but I'm expecting them to turn up this evening at my place because my morbid fascination with these quasi bond thingies is getting the better of me too. Since making this "term deposit" in Sept I'm up 12.5% in just on a month for an annualized return of 150%.

Hmmm...I can't help wondering what my BNZ relationship manager would make of that since they're offering a "stellar" 1% per annum on their term deposits

well of course if banking wasnt such a regulated industry there would be a banker who would offer you higher rates, and he would just go down the road to the bourse with a carefully calculated proportion of your money. You may not choose to trust his 7% tho

Considering the bond substitute though, shouldnt one , at this point , take the profits and run back to cash because from now on that would be more like a bond i.e risk free and you've already bagged the say 5-10 % that you require. Otherwise it remains true risk capital because you know one day Sxxx will Hit The Fan. And we never know when that might be. Sure sure, it all looks good now with QE etc but it often does look good right until the brown stuff blows. So was this money truly a bond proxy and its done well yay out now, OR, is it Risk Capital.

[Beagle]

22.85 cps gross / 329 = 6.85% Gross yield. Peat, this was nearly $3.70 similar time last year when interest rates were much higher. The party is only just getting started with this one. 5% gross yield = $4.57...still a fabulous yield in a zero interest rate environment for a Utility.

Psst...just between you and I mate we know its risk capital and all this quasi bond stuff is complete hogwash...just having a bit of fun