There's a long custom of Canadian companies structuring themselves in
such a way that they convey a large percentage of earnings and/or
operating income to shareholders in the form of dividends. In days past,
these distributions were screened from taxation by companies organizing
themselves as royalty trusts (CanRoys), but the Canadian government
largely shut that process down years ago.
In any case, Student Transportation (STB)
is a Canadian company that provides school busing services in the U.S.
and funnels a very large percentage of its cash flow to shareholders in
the form of dividends. That has made the company a high-yield option for
dividend investors, but I wonder if optimism about the company's yield
and future growth prospects has run a little too hot relative to the
company's underlying financial performance and valuation.
Read the full piece here:
Is Student Transportation Steering Toward A Ditch?
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