Forum Archive Index - March 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Bill
>
> 
>Have a look at the following, and if possible your feedback.
> 
>Stock          Price           Div Yld
>CNZ            89 cents        10.9
>SKC            838cents         6.8           Prices 20 Feb
> 
>For the price of one SKC I can buy 9 CNZ (appx) which gives a div
>of 98.1cents.
>

The number of shares you can buy for your money is irrelevant.  It is 
the yield that is the important thing.

> 
>OK Sky is a growth stock but the wisdom is that is already built
>into the share price.  
> 
>

I'd turn that around and say that because CNZ isn't a growth share 
the price will be permanently low.  In other words the market rates 
CNZ earnings of low quality, hence the high yield.

'Growth share' means growth in income.

The dividends I have received from SKC since being invested with them 
are as follows:

1999: 8.5cps +13cps = 21.5cps
2000: 12cps + 16cps = 28cps
2001: 14cps + 17.5cps = 31.5cps
2002: 15.5cps + 22.5cps + 20.0cps = 58cps

Can you see a pattern here?   If this pattern of dividend increase 
can be continued it won't take long for the shares you bought in Sky 
City to double the yield to near 14% on the original purchase price 
you paid of $8.38.  The prospect of a property company getting that 
kind of rent increase over four years, and passing it on to you, I 
would suggest is nil.

Even worse Capital Properties have had to call on their 
shareholders to stump up for funds just in the last year.   So you 
could argue that CNZ isn't even shareholder cashflow positive.  

Also office buildings in Wellington are a commodity business.  
The Casino is a monopoly protected by legislation. 

So as I see it, the comparison is no comparison.

SNOOPY

discl: hold SKC








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