tag:blogger.com,1999:blog-6596241840431427213.post8037119486453507365..comments2023-05-01T09:31:01.098-04:00Comments on Patient Investing: Bought more AAVJonhttp://www.blogger.com/profile/03060882352687149007noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-6596241840431427213.post-74592747094813026392007-08-07T20:18:00.000-04:002007-08-07T20:18:00.000-04:00Thanks for the explanation! I've got a grasp of i...Thanks for the explanation! I've got a grasp of it more clearly now.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6596241840431427213.post-19291625965998077402007-08-07T08:45:00.000-04:002007-08-07T08:45:00.000-04:00The payout ratio is a confusing issue for Canadian...The payout ratio is a confusing issue for Canadian royalty trusts because I think they use different metrics than American companies. If you look at <A HREF="http://www.advantageincome.com/pdf/2007-q1.pdf" REL="nofollow">their quarterly report</A> you see their payout ratio is 76%, which is actually rather low for them.<BR/><BR/>Canroys don't pay tax on income they pass on as distributions and so they deduct distributions from their income statements when calculating net income. But other companies don't deduct distributions because they get paid after taxes (they're double-taxed actually), so that money is counted in their net income.<BR/><BR/>For instance, say AAV has $100 million net income, then pays $76 million in distributions and reports their net income as only $24 million (that's what they pay taxes on). AAV would say their payout ratio is 76%. Yahoo Finance sees the report that their net income is $24 million, but doesn't realize dividends have been subtracted from that so it says their payout ratio is 76/24 = over 300%.<BR/><BR/>Another issue is that I think Yahoo and other places calculate the dividend payout by adding up the last year's worth of dividends. But since AAV had a huge dividend cut, that's misleading.<BR/><BR/>They issue new units every month I think because of their DRIP program, which creates new units and sells them for a 5% discount (to Canadians only unfortunately). You're right in that it is important to watch that, but hopefully they will use that money to expand. That is one of the differences between Canadian royalty trusts and American ones -- Canadian ones are free to use their money to expand operations, whereas American ones are created for a specific purpose, and when the resources are gone the trust dissolves.Jonhttps://www.blogger.com/profile/03060882352687149007noreply@blogger.comtag:blogger.com,1999:blog-6596241840431427213.post-24524402609798410672007-08-06T22:37:00.000-04:002007-08-06T22:37:00.000-04:00Those dividends are getting bloated :D congrats!J...Those dividends are getting bloated :D congrats!<BR/><BR/>Just one question. I saw that the payout ratio for AAV is 562%, which means they are paying out more than 5 times more than they are making right? <BR/><BR/>If I'm reading that right, does it not scare you a little bit? I got the info from Yahoo Finance(key statistics). <BR/><BR/>I noticed they issued new units a few months ago and was wondering if that's how they are able to continue to pay the high dividends without making the profit to back them up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6596241840431427213.post-25237766174592314362007-08-06T22:27:00.000-04:002007-08-06T22:27:00.000-04:00I haven't bought any more AAV lately, since I've b...I haven't bought any more AAV lately, since I've been trying to max out my IRA for the year. I do have an unhealthy love affair with AAV, though!zacharyfruhlinghttps://www.blogger.com/profile/16883625425421411114noreply@blogger.comtag:blogger.com,1999:blog-6596241840431427213.post-30634214135089354892007-08-06T17:12:00.000-04:002007-08-06T17:12:00.000-04:00I'm also trying to budget in advance for Christmas...I'm also trying to budget in advance for Christmas presents...we'll see how successful I am.<BR/><BR/>How do you choose individual stocks? Do you do a lot of research on them? I mostly invest in mutual funds and ETFs...diversified things that make it easy for me...SavingDivahttps://www.blogger.com/profile/10267021491907810696noreply@blogger.com