PSN - Dividend Growth Story
Following up on the comment from an earlier post about expecting PSN to increase its dividend in November, per their Q1 report they state that they have four priorities for the second half of 2012, the fourth one cited as follows:
"The Company’s priorities for the second half of 2012 are to:
• Following capital allocation to fleet expansion and new product development, assess Poseidon’s ability to achieve its longer-term goal to be a dividend growth company."
Now, that's somewhat odd language - and what I take it to mean in plainer English is to see if they can increase the dividend later this year in light of their capital requirements for new product development (the fleet expansion is already baked in the capital budget).
By the end of September they will have doubled their business from year end 2011, and given the complete non-erosion of margins, all other things being equal, they could double the dividend. Of course I don't think they are even remotely considering anything but a fraction of that - just pointing out that double the business, revenue, cash flow and earnings - logically they could double the dividend.
The factor that's unknowable at the moment is what their capital requirements will be for new product development. Many have long speculated on various potential acquisitions, and any such acquisition could require a lot of capital. To what extent does this influence management's thinking about being a dividend growth story - dunno. But I don't think anyone reasonably thinks it will inhibit an increase in the dividend later this year - after all their plans for new product development has always been part of their vision and it didn't inhibit their initiation of a very large payout.
All to say that I think the company has clearly signalled that a dividend increase is coming by year end. At least that's how I read their comment.