On August 18, 2008 this stock announced the conversion of it stock from an Income Trust to Dividend Paying Corporation. They also announced a decrease in the annual dividend rate of 1.82 per share, to $.50 per share. This decrease in dividend will put the stock yield in the same range as other Dividend Paying stocks, rather than the range of an Income Trust. The next day the stock dropped some 17%. The next week it recovered some 9.9% of its value. It has recently declined in line with the general market.
Part of the problem with stocks going from Income Trusts to a regular corporation is that you would have a different class of investors. Mostly people buy Income Trusts for the income. Dividend paying corporations are bought, not only for their dividends, but also for long term gain.
There is no doubt that this stock is going to see some turbulence in its price. Looking at analyst ratings, they are moving from a buy to a hold rating although some are retaining the buy rating. Personally, I do not have much of this stock as I had just started to invest in it and I usually invest slowly in a new stock. This is the first Income Trust that I have that wants to convert to a Dividend paying Corporation. There has been a bit of insider buying on this stock.
At the moment, I am going to hold on to my stock and see what happens. It might still be a good long term buy.
BFI is a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten U.S. States. Note that two-thirds of their business in US. Its web site is http://www.bficanada.com. See my spreadsheet on this company at www.spbrunner.com/stocks/bfc.htm. I have reloaded by spreadsheet with June 2008 Quarterly report figures.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.
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