…by Anura Guruge
This might only be of interest to active investors, and if you are as such you probably know much more about this than me. Given that I try to follow the market (though it does me no good) and keep abreast of financial news I have been hearing about ‘special dividends‘, more or less on a daily basis, for the last three weeks. I think it started with Winn Resorts special dividend before Thanksgiving. I missed that. What I am finding is that notification and reporting of special dividends is haphazard at best. That is really the motive for this post. I have been trying, since Thanksgiving, to keep track of what special dividends are in the offing, their ‘yield’ and most importantly the ‘ex-date’ by which you need to get in. I have been appalled by the lack of accuracy that I have seen on some of the financial sites, e.g., getting the ex-date mixed up with the payment date! So, yesterday afternoon, around 3:30pm I decided to compile a quick spreadsheet of what I think is coming up over the next couple of weeks.
As I was compiling the list, while checking the prospect of that stock against ‘Marketwatch‘, I was horrified to realize that AOL and SEM who were both giving out an attractive yield had an ex-date on December 3. That was Monday. Buying the stock on Monday would be too late. To get those specials you had to buy the stock on Friday — and there was only about 25 minutes left of the normal trading day. My first priority however was to call up my 20 year old son. Over the last 6 months he has decided that he wants to play the market. He has all the attributes to be very good at it unlike the father who is a proven dud. He plays chess at a very high level, and to me that skill set has to translate into also playing the market. [He is a junior at Wheaton College (MA) majoring in English in the hope of becoming a lawyer.] He has had mixed success so far given that the last six months have been brutish to say the least. He wasn’t there, so I had to leave him a v-mail. That didn’t leave me much time to do anything before the markets closed. C’est la vie. The joys of being a father.
Anyway, I put together this spreadsheet of the special dividends that I am aware of — and checkout ‘AWARE‘ at the bottom. As far as I can tell this should be accurate. I tried to check out the rates and ex-div dates from the original filings. My real value-add was that I computed realistic ‘yields’ for the specials, marking up the stock price to reflect what it might be by next week. I am not sure whether I will do anything in terms of buying any of these stocks for the dividend. Not sure what the ex-dividend consequences will be for the stock. In theory, special dividends are not backed into the price of the stock, as is the case with standard dividends. That said, I am expecting that most of these stocks will see some kind of price drop after the ex-div date — even if temporary. And then there is the looming ‘Fiscal Cliff’. I am amazed that the market has not had more convulsions. I had expected another 200 point drop last week; yet again demonstrating that I have no clue as to how the market woks. All that said, I will not be surprised if we see 600 point day, up or down, before January 1, 2013.
Anyway, here is my list. I would use ‘Marketwatch‘ to check out the stock. I have highlighted the ones that seem attractive to me, but given my luck and skill it might be best to avoid those and concentrate on the ones that I overlooked. GYRO looks too good to be trust. Costco is likely to do well, with or without the dividend, especially with the Joe Biden endorsement of yesterday. Movado might be a safe bet, as might Lancaster Colony.