Q: I am wondering if I should exit a small position in MG that I have in a registered account. It is trading near it's low and it pays a decent dividend. I am not sure that the dividend is safe and I am worried about the Trump affect on the auto industry. Your thoughts would be appreciated.
Thanks
Ian
Thanks
Ian
5i Research Answer:
The stock certainly has not done much, but its very low valuation does reflect a lot of the possible concerns. 12-month dividend payout versus cash flow is less than 20%. The dividend is likely secure, but no dividend is guaranteed. Good cash flow and growth are expected this year. Tariffs are a concern, but MG gets significant business outside of the US. With rates heading lower, we would be comfortable holding at the current very-low valuation for a few more quarters.