Q: I own FRU in a TFSA and although I appreciate the high dividend associated with this stock, I now understand that the dividend is not covered by either its Earnings or Cashflows.
Q1. With the NAV of the stock significantly down over the past few years and the dividend not being covered by either the Earnings or Cashflows, should I be worried about the relative safety of the dividend?
Q2. What are your thoughts on continuing to hold FRU in a TFSA and should a holder of FRU just cut their loss and replace FRU with some other stock?
Q3. What is your best idea as a FRU replacement should I need to sell FRU and replace it with another stock or ETF in the sector?
Thank you and I'll await your response.
Francesco
Q1. With the NAV of the stock significantly down over the past few years and the dividend not being covered by either the Earnings or Cashflows, should I be worried about the relative safety of the dividend?
Q2. What are your thoughts on continuing to hold FRU in a TFSA and should a holder of FRU just cut their loss and replace FRU with some other stock?
Q3. What is your best idea as a FRU replacement should I need to sell FRU and replace it with another stock or ETF in the sector?
Thank you and I'll await your response.
Francesco
5i Research Answer:
FRU dividend may not be covered by earnings, but it is by cash flow, with a 70% payout ratio. It...