Operational gearing is a good thing for a company that is growing, but any setback can have a substantial negative effect on profitability. If there is no fundamental problem with the business or its markets, then a cyclical downturn in profit for a company with a relatively fixed cost base will provide a good buying opportunity.
Patience may be required, but when there is a yield in excess of 7% with a promise that the dividend should be maintained this year then the shares are doubly attractive. The dividend cover is not as high as management would like, but it can be rebuilt when profit...
