The 5% plunge in Gannett shares yesterday, to $19.83, was triggered at least partly by a new Goldman Sachs report, predicting an imminent 30% jump in the cost of paper used to print newspapers. GCI is one of four companies that will see profits pinched the most by the price hike, the report says. (The other three are McClatchy Co., New York Times Co. and Tribune.)"Who said the tough environment facing publishers couldn't get tougher?" wrote Goldman analysts Peter Appert and Peter Salkowski, trade publication Editor & Publisher says.
Wall Street's growing pessimism about Gannett and the newspaper industry comes as GCI draws closer to its second-quarter earnings report, scheduled for release July 16. The yield on Gannett stock is now so high -- 8.1% -- that it's easy to imagine the board moving to cut the payout. But that would only send the stock deeper into the basement. "If it's fallen this low now, think what it will be on July 16,'' a Gannett Blog reader said yesterday.
Earlier: How long will Gannett's biggest stockholders wait?
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When is the next yield payout? Is it a one-time, annual payout?
ReplyDeleteThey pay dividends quarterly, most recently on July 1. So the next will be Oct. 1, right after the end of Q3.
ReplyDeleteThe dividends had been running 31 cents a share until the end of 2007, when things starting getting ugly, so they bumped it to 40 cents. That's where it has been since.
Assuming that stays unchanged, that means $1.60 a year per share -- very high indeed if the share price keeps falling. However, with the price falling so fast, the only way to profit would be to buy immediately before the ex.div. dates, hold until the payment dates, then get out fast and hope you've beaten the downward slide in share price.
If you owned 100 shares on Oct. 1, 07, and the price of those shares stays where it is now -- $19.60 -- until Oct. 1, 08, you would have $1,600 in dividends, but you would have lost $2,460 in equity value.