Mesabi Trust (MSB)

Mesabi Trust (I cribed this one from TheStinkyFeet), is a dividend play. IF the S&P has topped then it might be time to look for good dividend hands again. The problem is that most of the companies known for their dividends are in a bit of trouble. There are some good and some bad, but the ol' standby REIT' should all be looked at very carefully in this economy. Mesabi is also NOT bullet proof, holding interests in iron ore which is questionable during a recession, but seems to be fairing okay IF there really will be a rebound. As a trust, looking at their balance sheet is not too productive as far as margins, book, sales. What is useful is Revenue (from the trusts), quarterly growth, and cash flow which is parsed out in dividends. They do not retain any funds. To see how good of a year, (size of dividends) they might distribute would require diving deep into actual business's that feed in the revenue AND by doing some calculations on the iron ore prices, most of which theirs is low grade. Their dividends are very erratic. As such, from a caps perspective, I don't plan on doing that exercise. They typically average 10% dividends and stock price will appreciate if dividends increase. My thesis is that any fair dividends should beat out the S&P if we are topping. If we kick out another 30% gain in the next year then unless MSB sees both share price appreciation and dividend increases then it's probably no contest. In '06, '07, and '08 the largest of the four annual dispersements was in October, so maybe I can give this a try for the short run and see how it goes without getting "too hurt". :)

stinky feet