Eureka Correspondence

UXC's rewarding yield, understanding Telstra's buyback, a calendar for events and iron ore.

UXC’s rewarding yield

Hi, I read with interest Simon Dumaresq's article on UXC, but take task with his promoting a 6% dividend in 2013-14 they paid 3.75 cents a share which is closer to 4%. Rather than a top dividend player it’s an average dividend payer.
David McLeod

Editor’s response: Thanks for your letter. For the 2013-14 year you are correct – the current yield stands at just over 4% before including franking credits. However, Simon’s comments are forward looking as they are targeted at investors yet to enter the stock. He forecasts the company to pay out dividends of 5.4 cents a share in 2014-15. Given the entry price at the time of the article was 89.5 cents, that represents a 6% yield.

Understanding Telstra’s buyback

Are you planning to make some suggestions around bidding for the Telstra buyback?

It seems to me that buybacks of this nature are aimed at the professional market, but for mums and dads it’s all too difficult.

Obviously there are a lot of shares that can’t be tendered but even if half the shares can be tendered the amount available does not seem likely to result in a huge reduction in shares on issue so I don’t understand the scale back examples which suggest up to half of the shares tendered may be bought back. It’s all very confusing!
JK


Editor’s response: Thanks for your letter. Scott Francis has written in-depth about Telstra’s buyback (see article) as well as why buybacks are better than other methods to return funds to shareholders. Max Newnham has also covered the Telstra buyback last week and today. 

A calendar for events

I am looking around in the hope of finding a five-day forecast of the Australian stock market based on reports that are expected to be released and their anticipated contents. Certainly world events and US stock market results have an unpredicted impact that cannot be anticipated.


While nothing in life is certain and this is even more so when contemplating overall stock market results, it could be helpful in eliminating some of the savage troughs we have experienced this financial year.
PB


Editor’s response: Thanks for your question. Each week Craig James, Commsec’s chief economist, goes over the main economic indicators and events throughout the coming week. You can find his outlook in Alan Kohler’s weekend briefings.

China and iron ore

I read Alan Kohler's comments on iron ore pricing on Saturday and watched the video today. May I suggest the winners out of this are the Chinese. Maybe, as they are the buyers of iron ore (remembering it is a communist country with total state control),  they are manipulating the market price to buy 60% of their iron ore at the minimum price possible whilst paying the Chinese miners an economic rate, i.e. subsidising their continued operations.

Therefore, Alan's suggestion BHP, Rio Tinto and Vale are trying to starve the Chinese miners out of existence will never happen and in the meantime we are selling our resources for a song. Perhaps BHP, Rio and Vale should do the opposite: reduce production and let China use their resources first –then they will truly be price setters rather than price takers.
Ian Kilpatrick