And then there were three. Three months until 2017 is done and 2018 is here. I do not know about you but I am glad that September is over because if you own any shares of UNIT you know what I mean. The price of UNIT started to drop at the end of July from a high of $26.39 to a low of $14.66 at the end of September but of course I bought on the way down thinking it was going to go up but here we are more than a week into October and Bulls and Bears are still fighting over which direction the price should go. Let’s just say my portfolio is in the red.
For people who have not been keeping tabs on UNIT and what is going on here is a quick run down. Windstream Holdings (WIN) is a telecom provider in the US who back in 2015 decided to move some of its assets into a separate company called Communications Sales & Leasing (CSAL). It did this to try to reorganized its books and try to cut down on costs and try to make profit. Well, move ahead 2 years and WIN this summer decided to cancel its dividend for the time being because it was still having trouble making a profit while at the same time wanting to start paying off notes that will be maturing soon.
So of course this was not taken likely by investors and Mr. Market and so people were selling their shares and financial groups were downgrading WINs ratings from buy/hold to hold/sell and also downgrading its credit rating. What does this have to do with CSAL now UNIT you might ask? Well, a master lease was formed between WIN and UNIT that for at least the next 15 years WIN would lease assets from UNIT and in return pay UNIT $650M a year. The problem for UNIT is that when it was formed WIN was its only customer thus it relied heavily on WIN. As of 2Q2017 UNIT has been able to acquire a few companies and inked some contracts with a few customers cutting its dependence on WIN down to 70%.
So because of WIN’s financial issue and how its ratings have been cut this carried over to UNIT which caused people question its ability to make a profit and continue to cover its dividend thus people start to sell/short UNIT and it also had it ratings lowered which caused it to lose almost half its share price in about 2 months. Not to mention about midway through September one of WINs bondholders said that WIN was in breach of its contract because it created UNIT thus said its bond was in default. This didn’t help either company’s stock price. The company that made this claim is Aurelius Capital Management which many call a vulture hedge fund because of the tactics it uses. Thankfully a ruling said that UNIT did not breach its contract. If you want more information on this here is a great article written about it: (https://seekingalpha.com/article/4111368-uniti-group-facts-behind-action). So hopefully UNIT PPS will start heading back up soon. Many believe that a good 3rd quarter reporting and UNIT not decreasing or canceling its dividend would be the catalyst it needs.
So as I said, as the the price of UNIT was going down I was buying shares to average down my holdings in UNIT. At the end of the day I bought a total of 45 shares of UNIT at the average price of $17.50/share with a total cost of $797.55 after fees. This brought my average down to $20.67 from $23.26. 45 shares of UNIT increased my forward annual dividend by $108. This brings my yearly dividend to $1330.82 or $332.71 a quarter or $110.90 a month on average. Not bad at all.
I decided to DRIP my GLAD stock because the monthly payments I am getting from it almost equal the cost of one share of GLAD so I thought this would be an easy way to increase my shares of GLAD witout it really costing me anything. This caused this month’s dividend payment to be only 5.50 thanks to CLDT but I also got .858 shares of GLAD. Other than my first month of dividend investment which was January 2016, this month was my lowest month in dividend payments. I need to look for stocks that pay dividends on the 3rd, 6th, 9th, and 12th month of the year to help get this back up to a more reasonable number.
Happy trading and see you in retirement!
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