Neratel

[hyom]

I have vested interest in NeraTel.

This is one of the rarest takeover stock in which recent shareholders either lose most of their profits or lost money. For the past 8 years, NeraTel has been paying consistent dividends with yields between 8%-10%. This is the prime attraction of NeraTel.

The takeover price of 45cts includes dividends which shareholders will get anyway without the takeover. Excluding dividends, the takeover price is only 39cts.

On a growth basis, NeraTel is not impressive. In fact, the book value has been sliding down since 2003. Its earnings has been quite flat over the years too with earnings per share hovering at around 3cts per share. PE ratio is not impressive at an average of 17 for the past 4 years. However, what impresses me is the operating cashflow. Operating cashflow grew at 15% in 2010, 16% in 2009 and a whooping 80% in 2008. The absolute amount of the operating cashflow is comfortable enough to cover the generous dividends. With such strong consistent cashflow, the very generous dividends are definitely sustainable.

The takeover has killed this dividends play. I was expecting better compensation for the death of my dividend baby.

http://help-your-money.blogspot.com/