Q: Hi - When I see a yield as high as SOBO's is, I think a dividend cut is possible. What are your thoughts on the sustainability of such a high dividend? What is the approx payout ratio?
5i Research Answer:
SOBO is a bit different than typical high yields, as it STARTED out high right on its first dividend declaration. We would have preferred a lower amount that could be increased. But the company would not have come up with this rate without thought, and we do not think the dividend is in any jeopardy. The payout ratio will likely be 110% if we look at earnings, but down to the 70% range if we look at cash flow. This is a very approximate estimate as the company has not reported any public quarters yet.