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Discussion Starter #1
Can somebody tell me reasons why NOT to buy Yellow Pages?

It is currently dividend yielding over 20%. Dividend paid monthly and they haven't missed a beat.

Good PE ratio.

It also has online presence so google will never replace them.

Small business rely on yellow page for business.
 

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I've owned YLO for a long time... first purchased after the 2006 Halloween Income Trust tax announcement. I think YLO is weighed down by concerns surrounding comparable companies in the US. I still like it but don't plan on adding to my position (I'm mostly putting new money into XIU).
 

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My post got deleted somehow. Anyway, here's the shorter version:

I hold the preferred (YPG.PR.B) because of the better after-tax return and its 2017 retraction date. The time frame is perfect, since Yellow Pages has a decent short to medium term outlook so 2017 is about the year to redeploy the cash somewhere else.

Preferreds also have a higher claim on assets than their income trust counterparts. My understanding is that if Yellow Pages plan to conserve cash, they'd have to eliminate their trust distributions first before touching their preferreds.
 

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My post got deleted somehow. Anyway, here's the shorter version:

I hold the preferred (YPG.PR.B) because of the better after-tax return and its 2017 retraction date. The time frame is perfect, since Yellow Pages has a decent short to medium term outlook so 2017 is about the year to redeploy the cash somewhere else.

Preferreds also have a higher claim on assets than their income trust counterparts.
Hey FJ,

Sorry, your post got moved to a new thread, check it out:
http://canadianmoneyforum.com/showthread.php?t=250
 

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There is no shortage of investors that could tell you why to sell Yellow Pages Income Fund. Judging by the thread length at the Financial Webring Forum, this company tends to attract a lot of discussion.

I own the units and my thoughts are here:
http://themoneygardener.com/2007/07/yellow-pages-income-fund.html
&
http://themoneygardener.com/2007/10/added-value.html

I understand both sides of the argument, however I obviously think Yellow Pages units are a good investment going forward. Until organic growth in their directories business becomes negative the sell side doesn't really make sense. In the meantime, they are growing online and cropping up more and more when one performs searches on google, google maps, etc. Add this to Canada 411 and auto trader and I think there is a good online story there. Regarding the phonebooks, I believe they are still relevant, and I think it is easier to imagine a business owner upgrading to the ylo directory+web package instead of pulling away from yellow pages all together.
 

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My fiance owns it in her RRSP account, I have been keeping a close eye on them I dnt see any huge problems with it. but as CC pointed out the main concern is what happend to some similar US companies. But yellow pages has some online presence including 411.ca
 

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This is a stock that I jump in and out of on a regular basis. I can see the logic in holding it long term (nice yield, low-risk type of business) but it's also a day-trader-friendly stock as the ups and downs are very predictable each month (starts heading down right after ex-div date, then starts picking up a week or two before record date).
 

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I thought about getting into YLO.UN a few weeks ago, and then I realized that I haven't used a phone book (or its online counterpart) in at least 3 years. Every year in my apartment complex, the stack of phone books that get delivered sits there 90% full for months, until the LL gets rid of them.

It might be a little too Peter Lynch-like, but I passed on it for that very reason. I can't see it continuing its dividend once it's customers realize that it's outdated and useless.
 

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I was just thinking about jumping back in for the yield and noticed that

> Yellow Pages Tgt Cut To C$5 From C$6 By T Weisel >YLO.UN.T

So I guess I will pass...
At $5 the yearly yield is over 22% with $0.0975/ share per month, so how is that a bad deal?

After one year your average cost is around $3.80
 

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A drop to $5.00 means that the yield for a year would only be around 7% after the draw down. When you also include the uncertainty of what happens when conversion to a corp occurs - for me there is better value elsewhere.

When BFC, another formerly popular business trust, converted to a corp last year it meant an overnight drop in the stock price of 25% (and an eventual loss of 60% of its pre corp value by the fall) and an announced distribution cut in the 75% range.

Why would I want to take on unnecessary risk? There are better opportunities - for yield, Artis Reit (ax.un) is paying 17%, has analyst support and not analyst derision like YLO.un, - and does not have to go through conversion.
 

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Don't they also control the auto trader, and other used goods for sale publications. Seems that in a recession their listings will increase, although craigslist will take a bite out of their bottom line.
 

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Note that price of YLO.UN (trust units)has been dropping of late. Interestingly, YPG.PR.B (pref) is rising. Investors may be anticipating a dividend cut to the trust units. Back-of-the-envelope calculation of YPG.PR.B says that yield to retraction is in the area of 15% - which is still excellent. If you look up YPG.PR.A, you’ll notice that the price of this pref is almost $8/share higher than the B shares. "A" has an earlier retraction (about 3 years vs 8 ). I guess the feeling is that investors think Yellow Pages will survive 3 years from now to pay you for A but not 8 year to pay for B :confused:?!?

Disclosure: own both trust units and pref B – which are going in opposite directions. Suppose the net effect is emotional cancellation…
 

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Some analysts are wary of YLO.un because the balance sheet is more levered than they would like. So there is refinancing risk as well as concern over the stability of the distribution due to debt servicing requirements.

BTW a good place to get a professional manager's opinion is at Stockchase.com.
It summarizes managers opinion given on Market Call tv show on BNN.

Link: http://www.stockchase.com/
 

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I've got YLO.... I'm not worried about the "disappearing yellow pages" thesis. They still use them in hotels and other places - besides, they've got other online businesses too. The stock has been somewhat volatile, but I'm holding. I might still add some more in the future. Confusion (above) brings up an interesting point about day trading with it, but I'm never a trader. Too stressful, not worth it!
 
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