February 18, 2003

Current price is 34, dividend yield is an attractive 6.50 %.  Reading a DBAB report dated 2/7/03, they claim “ 6.4 % dividend is extremely secure “.  Recent pricing increases lead DBAB to feel their growth estimates of 7 % are supported.  We are currently using 6.0 % growth rates. 

January 7, 2003

Started review of PEG. Yield is 6.00 % , dividend of 2.16 with price at 36.50.  Dividend payout ratio is at 61.00 %, value line expects it to drop to  56 % in 2003. History shows that payout ratio is below  current levels, generally in the mid  60’s to high 70’s.  Historically PEG has had a greater div %, although a higher payout % as well. We need to monitor if low payout is because of higher price or lower payout ratio. I suspect it is because of ratio, since PEG is trading below historic  multiple of cash flow for the last 11 years.  Cap spending has been high lately. PE ratio is on low side at 8.0, range has been 10 to 13.  S&P bond rating is A -, stable outlook. Long Term Debt ratio is at 65.0 %, this is definitely on high side of history. VL gives it a 2 Safety Rating and NJR gives it a C.

Intangibles have created negative book value. Most certainly something to watch in future. To me, this is more of a speculative play, primarily because of the high intangibles and scuttlebutt about another Enron.. Price to sales ratio is quite low. Hence , if intangibles are not an issue, then this could blossom to a nice return. Again, this is more of a speculative situation.  Yields on 04 are 2.0 %, 05 at 3.0. 07 at 3.6 , ’12 at 4.75 %, 2014 callable 6.0 %.