Rogers Sugar Inc. a stable dividend payer

Mar 6th, 2013 – Comment

The three-year chart indicates that there is some resistance forming at $6.50.


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Lou,

Rogers Sugar just paid a healthy 36 cent one time dividend. Normally it paid 9 cents quarterly. Would you see this as good or bad news for Rogers?

Sincerely,

Pat

 

Hey Pat,

 

This will be the second time that I review the case for Rogers Sugar Inc. (RSI TSX). The last was on October 29, 2012 when the shares were trading for $6.37. Margaret wanted to know why the shares were going up. The investigation revealed that the advance was driven by technical buying that had informed investors taking advantage of their ability to read the signs along the trail. Using the same tools it was advised that the stock was pulling back ahead of the release of Q4 results. It was also observed that the shares were about to test support along the 50-day moving average and that the RSI and MACD were suggesting that more selling was in the offing. Retrospectively that is exactly what happened. The shares pulled back on the release of Q4 and traded below $5.60. From there it started a new advance which has brought it back to over $6.40.

To your question regarding the distribution of cash to shareholders as a special dividend I don’t see it as a bad thing. RSI is not a growth story and the board decided that the cash that it had squirreled away over the last five years would be best distributed to shareholders as opposed to other uses.

A review of the charts will provide greater insight as to how the stock might proceed from here.

 

 

 

The three-year chart indicates that there is some resistance forming at $6.50. However if it can move through $6.50 it could run towards $8.00 without much in its way.

 

 

 

 

 

The six-month chart provides a close up of the behavior of the MACD and the RSI which at best are currently flattening out. The uptrend line of the advance that started in November is still intact suggesting that the stock is a hold for those looking for a dividend yield of 5.59% from one of two companies in the business that enjoy tariff protection.

Make it a profitable day and happy capitalism!

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