Yellow Pages Income Fund (YLO.UN) has cut their distribution by 31.6% to $0.80/unit annually. This move was based on their expectation for continued difficult market conditions, and their objective of securing additional financial flexibility. The company also announced that their preliminary dividend policy at conversion to a corporation in 2011 will be 60-70% of earnings.
Despite the extremely weak economy Yellow Pages announced results that were virtually flat to slightly up from Q1 2008. Organic online growth was up 30% and directories were essentially flat. YLO's consolidated net earnings actually rose 3.6% in the worst advertising market in years. This company continues to show their resiliency in unprecedented market conditions.
Since this stock was yielding 20%, the market was telling us that they were going to cut this pay out. Some analysts that I have heard believe that each and every income trust will have to cut distributions going into 2011, despite what management says. Count this as one, because YLO's management did claim that they would keep the current distribution through conversion and the financial crisis has proven that forecast to not be met.
1 comment:
Hey MG,
What do you think of Yellow Pages? I sold my share a month ago. I think to more time will past, the more people will actually see that YPG do not have the same kind of monopoly they had with the paper ads. Now with the internet search more and more popular, I think the best long term move is to sell. I think better deals can be found elsewhere and I had to much doubt with this stock so thats why I sold. I used this money to buy JNJ.
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