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GEO - Geo Group: Why The 13% Dividend Yield Is A Value Trap
Geo Group Inc REIT
GEO's recent dividend cut is not nearly enough to deal with its large debt load.
GEO has pronounced exposure to Federal Bureau of Prisons, which may lead to significant headwinds in the near term.
Once GEO fully eliminates the dividend, I expect the yield-chasing crowd to disperse, leading to material weakness in the stock price.
Those thinking that this is a value investment are advised to take into account the risk that shareholder returns may be muted until leverage is paid down.