TransAlta (Symbol-TA)

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fin0007
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Re: TransAlta (Symbol-TA)

Post by fin0007 »

Quick read of the financials, earned 24 cents per share this quarter.

I checked the dividend for the quarter, it's 29 cents per share.

I think there' a conclusion that one should draw.

They are going to run out of cash pretty soon. Perhaps it's bankers will
call the CEO in for a spanking and a threat to cut the Lines of Credit or
other nasty things.

Jumping into bed with Warren may sound positive, but he looks after himself first.
The accountants and auditors will start to get nervous and make sure they can defend
every decision. That cuts future earnings. A couple of directors will resign and be replaced
with directors who hold the minimum number of shares for a six figure director fee.

Any bets when the dividend will be cut and the stock hits $ 10.
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Re: TransAlta (Symbol-TA)

Post by Shakespeare »

You have to look at cash flow, not earnings. Also, a lot of the dividend is DRIPped and not paid in cash.
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Re: TransAlta (Symbol-TA)

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scomac wrote:
adrian2 wrote:Up $0.49 to $15.71 -- Ding! Dong!
I think the bell wrang about a month ago.
A cathedral bell echoes... echoes...
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Re: TransAlta (Symbol-TA)

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Shakespeare wrote:You have to look at cash flow, not earnings. Also, a lot of the dividend is DRIPped and not paid in cash.
Dripping may not require cash for dividends, but wouldn't the dilution affect share price in same way as a reduced dividend (reduced dividend yield either way). Apparently they have 70% participation in Drip program.

I have owned TA for 9 years. Luckily sold 1/2 when it at one time more than doubled. Right now it is back to what I paid in 2003. So I am not complaining and will hold on. Butcurrent financials are really not that encouraging.
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Re: TransAlta (Symbol-TA)

Post by Shakespeare »

Yes, the dripping is dilutive. But it gives them additional time.

If the IRR on that "cash" is greater than the dividend, it's a net positive.

The need for power in this province isn't going to go away and new plants, primarily NG or NG-cogen, are going to be needed to replace coal plants.
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Re: TransAlta (Symbol-TA)

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Springbok wrote:Dripping may not require cash for dividends, but wouldn't the dilution affect share price in same way as a reduced dividend (reduced dividend yield either way).
No, the dividend yield is unaffected by dripping. Earnings yield is reduced, however.
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Re: TransAlta (Symbol-TA)

Post by Shakespeare »

The dripping gives the company additional cash at the dividend rate.
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Re: TransAlta (Symbol-TA)

Post by Springbok »

adrian2 wrote:
Springbok wrote:Dripping may not require cash for dividends, but wouldn't the dilution affect share price in same way as a reduced dividend (reduced dividend yield either way).
No, the dividend yield is unaffected by dripping. Earnings yield is reduced, however.
If the stock price goes down because of dilution, you are saying that the dividend yield does not change??
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Re: TransAlta (Symbol-TA)

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Springbok wrote:
adrian2 wrote:
Springbok wrote:Dripping may not require cash for dividends, but wouldn't the dilution affect share price in same way as a reduced dividend (reduced dividend yield either way).
No, the dividend yield is unaffected by dripping. Earnings yield is reduced, however.
If the stock price goes down because of dilution, you are saying that the dividend yield does not change??
That was not your assertion. Dilution means more shares are outstanding, it says nothing about the stock price. It's similar to a secondary offering, sometimes the stock price goes down thereafter, sometimes it go up (e.g., TA secondary offering at $15).

More shares outstanding = less earnings per share.
More shares outstanding = same dividend per share.
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Re: TransAlta (Symbol-TA)

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adrian2 wrote: That was not your assertion. Dilution means more shares are outstanding, it says nothing about the stock price. It's similar to a secondary offering, sometimes the stock price goes down thereafter, sometimes it go up (e.g., TA secondary offering at $15).

More shares outstanding = less earnings per share.
More shares outstanding = same dividend per share.
I never made an assertion. I asked a question. If market knows what it is doing, same company value, but more shares outstanding should result in lower share price.

Dividend yield goes up even although dividend per share stays the same initially.
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Re: TransAlta (Symbol-TA)

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Springbok wrote:Dividend yield goes up even although dividend per share stays the same initially.
Earlier you wrote: reduced dividend yield either way.
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Re: TransAlta (Symbol-TA)

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Springbok wrote:If market knows what it is doing, same company value, but more shares outstanding should result in lower share price.
Not necessarily: if the company efficiently deploys the new capital, it's not the same company value.
DRIP = secondary offering for every dividend; it does not imply a lower share price.
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Re: TransAlta (Symbol-TA)

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adrian2 wrote:
Springbok wrote:If market knows what it is doing, same company value, but more shares outstanding should result in lower share price.
Not necessarily: if the company efficiently deploys the new capital, it's not the same company value.
DRIP = secondary offering for every dividend; it does not imply a lower share price.
You never give up do you :roll:

http://en.wikipedia.org/wiki/Stock_dilution
Stock dilution is a general term that results from the issue of additional common shares by a company. This increase in the number of shares outstanding can result from a primary market offering (including an initial public offering), employees exercising stock options, or by conversion of convertible bonds, preferred shares or warrants into stock. This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings per share, or the value of individual shares. A broader definition specifies dilution as any event that reduces an investor's stock price below the initial purchase price.
Another link on dilution effect of drips, especially with companies that are not growing.

http://www.pfhub.com/how-drip-dilution- ... portfolio/
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Re: TransAlta (Symbol-TA)

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Springbok wrote:You never give up do you :roll:
I don't give up when reading an inaccurate statement, such as a DRIP affecting the share price in same way as a reduced dividend (reduced dividend yield either way).

A reduced dividend, all else being equal, results in a reduced dividend yield; so far so good.
A DRIP, all else being equal, results in a constant dividend yield.

A reduced dividend yield, with the dividend itself kept constant, means the share price has gone up.
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Re: TransAlta (Symbol-TA)

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adrian2 wrote: I don't give up when reading an inaccurate statement
I don't usually either, but for you I will make an exception.
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Re: TransAlta (Symbol-TA)

Post by fin0007 »

I probably have four or five DRIP plans. I monitor them reasonably closely.

DRIPS are a great idea if the stock price is rising and you want to hold more of
the stock.

It sure sucks when my $ 200 dividend is used to purchase shares that are only
worth $ 150 a year later
.
I have some JNJ shares on a DRIP plan. Sure lost as the Cdn dollar appreciated
against the US dollar.
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Re: TransAlta (Symbol-TA)

Post by 2 yen »

This article details quite small amounts of money - is there any profound meaning in this positive force majeure ruling?

http://www.reuters.com/article/2012/11/ ... ews&rpc=43
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Re: TransAlta (Symbol-TA)

Post by adrian2 »

About a year ago, there were lots of speculations about how the extra few percentage points of dividend from TA will be treated, taxwise.

Well, I've double checked my T-slips from TDW and every penny paid by TA into my account has been reported as eligible dividends. Much ado about nothing...
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Re: TransAlta (Symbol-TA)

Post by like_to_retire »

adrian2 wrote:About a year ago, there were lots of speculations about how the extra few percentage points of dividend from TA will be treated, taxwise.

Well, I've double checked my T-slips from TDW and every penny paid by TA into my account has been reported as eligible dividends. Much ado about nothing...
Yeah, but at the time, and still today, TransAlta documentation on the subject is completely baffling.

When I got my T slips I just shook my head that the premium had the simple tax characteristic of dividend and therefore is reported as such and has no effect to cost base.

I do remember you had lots of ideas on the subject at the time that I was completely confused by because I didn't see (and still don't understand) how the premium could be construed as ROC and certainly has no effect on cost base:

Bottom line, after recording the ROC extra premium:
- no resulting gain/loss (as required by CRA for a superficial loss)
- no extra dividend included in the yearly total
- cost base adjusted downward by the extra amount.


It appears the premium is simple dividend. No effect on cost base.

ltr
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Re: TransAlta (Symbol-TA)

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like_to_retire wrote:When I got my T slips I just shook my head that the premium had the simple tax characteristic of dividend and therefore is reported as such and has no effect to cost base.

I do remember you had lots of ideas on the subject at the time that I was completely confused by because I didn't see (and still don't understand) how the premium could be construed as ROC and certainly has no effect on cost base:

Bottom line, after recording the ROC extra premium:
- no resulting gain/loss (as required by CRA for a superficial loss)
- no extra dividend included in the yearly total
- cost base adjusted downward by the extra amount.


It appears the premium is simple dividend. No effect on cost base.
My speculation was about "what's the worst it can happen". Just enjoy that life proved to be simpler than that, as the whole payout has been T5-d as eligible dividends -- no need to stir the waters and split the payout into two or more components.
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Re: TransAlta (Symbol-TA)

Post by Norbert Schlenker »

BMOIL reported it on their T5's as "other income".
Nothing can protect people who want to buy the Brooklyn Bridge.
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Re: TransAlta (Symbol-TA)

Post by like_to_retire »

Norbert Schlenker wrote:BMOIL reported it on their T5's as "other income".
And so it's just as confusing as it was from the start.

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Re: TransAlta (Symbol-TA)

Post by broke »

Norbert Schlenker wrote:BMOIL reported it on their T5's as "other income".
As did RBC DI
1. On T5 slip, shows up in other information(see the back) type in as box 14. ADDED:(Therefore line 121, interest)
2. In the investment summary sheets, coded (7), as other income from Canadian sources

So not "T5'ed" as eligible dividends at RBC either.

It would appear that even the big banks cannot understand agree to the procedure for declaring the payout.
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Re: TransAlta (Symbol-TA)

Post by adrian2 »

In any case, it's extra money in your pocket, taxable in idiosynchratic forms, dependent on your broker. As long as your marginal tax rate is less than 100%, it's a good thing.

If you're so annoyed by the idea, just donate it to the forum! :P
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Re: TransAlta (Symbol-TA)

Post by Shakespeare »

Down to $13.86.

Somebody must be expecting a dividend cut.
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