- 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.
For further details see:
Geo Group: Why The 13% Dividend Yield Is A Value Trap