Diverse Income Share Discussion Threads

[powereddrones] 11/12/2023 19:03

RE:662

Sorry.

It's still dropping. Are we going to see 5p?

I have created a new strategy now - I don't pin my hopes on a few stocks.

Just buy a set amount on anything that yields over 5% and has a market cap over 3bn.

I don't care what it does, as long as it does these two things.

hxxps://uk.investing.com/stock-screener/?sp=country::4|sector::a|industry::a|equityType::a|exchange::a|yield_us::5,10.64|eq_market_cap::3000000000,37200000000000%3Cyield_us;1

[maywillow] 10/12/2023 12:36

Chrisinrealestate
8 Dec '23 - 22:06 - 663 of 663
0 0 0

[chrisinrealestate] 08/12/2023 22:06

https://fintechcatalystsltd.com/u/signup?r=

[tag57] 08/12/2023 19:30

Not that funny when your average price is 19p 😭

[powereddrones] 08/12/2023 18:45

I3E at 10p and paying 10% - funny how time passes.

[marmar80] 25/7/2023 23:14

Charts suggest gas prices surging soon, have a look

[spangle93] 25/7/2023 22:40

AECO Gas price is the key... over 50% of I3E production is gas (though 2023 drilling focus is on oil)

[marmar80] 25/7/2023 19:03

I3E divi still at 8%. Oil prices rising. Many already producing wells, new drilling to start any day.

[spangle93] 21/7/2023 15:07

I think DEC is probably not only one of the highest, but also one of the most sustainable. It's more like a utility, given that its product prices are fixed by its extensive hedging (rather than a regulator), so it manages its cost to ensure that there's a big margin (typically 50%) between revenue and cost of production. Moreover, there's no exploration or development risk because it doesn't drill.

[bluemango] 21/7/2023 14:15

Aleman, re your #640

Thanks for the mention of RBGP where I've taken a modest position. I take the view with stocks like this that say the yield fell from 16% to 9% I'd still be happy assuming no large capital erosion from these levels. I like the fact that everyone seems to have given up on it; a moribund thread which is what I like when buying.

My portfolio's had a rather torrid time over recent months with dividend cuts in STCM, CASP and I3E. Hard as ever to pick good income stocks but I'm particularly keen on shipping stock SBLK (on Nasdaq) which has a unique competitive advantage and I'd be buying more if I didn't have shedloads already. I'm anticipating a forward yield of 13.38% there. Also sticking with FAIR, VTAS, DEC, CAML, HFEL, MNG, PHNX and CASP, also I3E and re-entered PEY. Average yield from all those in my portfolio is 11.25% bearing in mind two or three overweight positions which skew the overall yield. Whether it's sustainable remains to be seen ...

[marmar80] 21/7/2023 08:24

Thanks for this post. Im new to i3e so any light on the past days is appreciated. My personal take, divi was too high, but they were led by the much higher oil proces due to the RU-UKR conflict. Reducing divi was a good move. They have also commited to drilling less wells this year, Im no bothered, this way they will not spend much cash on it. They have new 100M facility to acquire new business or expand drilling programme so no dilution to come. Institutional investors are buying now too so I'm convinced in doing well. Btw. I didn't avoid HUR, got my money back and retained DCUs which shiuld deliver extra cash within next 3 years.

[spangle93] 21/7/2023 08:12

marmar - When I3E entered Canada, they talked about returning 30% of FCF to investors through dividends. That quoted figure has swung from 20-40%, but they've consistently said it. It took a fair while and a few court hearings, but they achieved that. They've also said that they would either acquire or drill, based on the oil price, and they've been pretty consistent with that philosophy too.

At the end of 2021 they RNS'd "i3 has previously conveyed that it will distribute by way of dividends up to 30% of Free Cash Flow, defined by the Company as "Cash Flow from Operations minus Expenditures on Property, Plant & Equipment minus Expenditures on Exploration & Evaluation assets". With 2022 being planned as a particularly capital-intensive year, and with a flexible capital programme, forecasting the actual level of Free Cash Flow is more uncertain. As such, and to give clarity to i3's investors regarding next year's distribution, the Company is committing to pay a minimum of £11.827 million in dividends during 2022 (split equally and paid in conjunction with the release of its 2021 Annual and 2022 Interim Reports), equating to 1.05 pence per share - a 10.2% yield based on i3's current share price

In May 2022, the Company increased the minimum dividend to be paid in 2022 by 25% from £11.827 million to £14.784 million. "The Company remains committed to delivering a sustainable monthly dividend as part of its total return model, with an underlying policy of distributing up to 30% of free cash flow back to shareholders. Due to strong operational, drilling and financial performance and supported by current cash flow forecasts, the Company intends to increase the committed dividend payment for 2022"

So, the philosophy has remained constant, and the target of a 10% dividend seems common - the problems have been (1) accurate prediction of cash flow at the start of the year, and (2) using phrases like "sustainable", "Robust throughout the commodity cycle", which strongly implies to investors that they should not expect a cut.

Indeed, the opposite is true - it will go up or down depending on the runway to sufficient cash.

A more sustainable approach would be to pitch a dividend at a more modest but maintainable level, say 20% of FCF, and if during the year the FCF is higher than expected, pay a special dividend.


P.S. On the flip side, well done for avoiding HUR. I did sell some at a high price, but will take a pasting on that overall.

Also, credit should be given to I3E management for entering Canada - the purchase price for the Gain and Toscana assets was just ridiculously low for producing assets, at under $1/boe reserves.

[marmar80] 20/7/2023 22:48

I know what you mean, but market capitalisation is just too low at this moment. Mcap now at 150M created a big opportunity for new joiners to get the 8% divi pa. For those who bought shares for 20-30p it is a big cut not only in the share price terms but also divi return. It is just like that, marker is sometimes unfair for the LTHs. Now a good time to buy and hold.

[fordtin] 20/7/2023 20:11

marmar80 -

They were paying a dividend yield of just over 8% when I first bought i3E shares. If it was "wrong paing very high dividends" iro 8% then, it must still be "wrong paing very high dividends" iro 8% now.

Coincidentally, at half the share price and half the dividend, they're back to being "wrong paing very high dividends" iro 8%.

[marmar80] 20/7/2023 17:46

Fordtin, I am very new to i3e. Had them on my radar for a long time and decided to enter now. I compare their mcap to the Hurricane Energy as it was also 150m when takeover offer has arrived. Hurricane had only one well producing 8,5k bopd, here are many wells and 22k bopd and more new wells do be drilled literally now. I3e was wrong paing very high dividends so now after the cuts it is worth to enter. No company these days can guarantee you divi unchanged.

[fordtin] 20/7/2023 15:25

Hi Boystown,

you need to consider that they've already paid out about £12 million in the first 6 months. So that forecast, which is subject to all the caveats, is iro £3 million for the third quarter.

unfortunately, I believed them when they said the dividend was sustainable (see spangle's post #644 re- robust) and have been caught out holding a lot more i3E shares than I would like to own, given the recent news. I'm waiting patiently to unload some into any meaningful price recovery, so not really the best person to listen to if you want a positive view.

[boystown] 20/7/2023 12:23

Thanks fordtin. I'm a bit out of my depth here - but I3E does look generally undervalued and as "part of a balanced diet" etc etc! :-)

Re the divi, they said with the update on 29 June: "The Company's adjusted dividend programme is forecast to return £15.4 million in dividends during the first nine months of 2023."

AFAICS that works out to around 1.2833p per share which - if extrapolated over 12 months rolling forward - would equate to a yield of over 13%?????

[fordtin] 20/7/2023 11:00

I'm not sure about the i3E dividend being a "Very safe bet".

They cancelled the monthly dividend over a week after shareholders were expecting it to be announced and still haven't given a firm commitment to pay the proposed replacement of a quarterly dividend with a pro-rata reduction of 50%.

In the recent Q&A they put several caveats about loan covenants and commodity prices, which need to be met every quarter, before any future dividends can be declared.

"Q12: The reasons for the Dividend & Capex Cut have been explained well and I think understood, can you explain the reasons for moving away from a monthly dividend - this was innovative and well received by Investors - why can this be maintained and reviewed and set quarterly after financial ratio checks etc. I cannot see how a loan agreement can affect the scheduling of dividend payments?

Answered in Q8

"Q8: Was it reasonable and necessary to suspend monthly dividends entirely and with little notice when many investors will have factored in the regular payments to their budgets"





"Q20: Can you please clarify the dividend policy going forward. Should shareholders prepare themselves for another dividend reduction and the possibility of a further move from quarterly dividends to bi-annual or annual, or no dividend at all?"

[marmar80] 20/7/2023 08:49

Correct.
Now at 12.50p (sp has halved but oil production is higher!) per share the divi annual yield is approx 8-9%. Not bad. Very safe bet imo.

[spangle93] 20/7/2023 08:14

i3e dividend stated in post 642 is AFTER it was halved...

RNS 29 June

", the Company is also revising downward its 2023 expected go forward dividend by 50% from 0.171 pence/share per month to the equivalent of 0.0855 pence/share per month. Additionally, the Company will now commence paying dividends on a quarterly basis and will pay the Q3 dividend in October 2023"

This was after having said in December 22 when setting the original monthly level that it was "robust through the commodiry cycle". Consequently, there's a lot of trust to be restored there.

[aleman] 19/7/2023 09:10

So which ones will be cut? STCM has already announced its is likely to be about halved.