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Get Rich with Dividends: A Proven System for Earning Double-Digit Returns
book

Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

by Marc Lichtenfeld
July 2012
Beginner
201 pages
5h
English
Wiley
Content preview from Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

Special Dividends

A special dividend is exactly what it sounds like. It’s a dividend that’s, well, special. Any questions?

A special dividend is usually a one-time payment, often much more than the regular dividend.

Look at the dividend chart (Figure 7.3) and data (Figure 7.4) on American Eagle Outfitters (NYSE: AEO). You can see that in 2009 through March 2010, American Eagle paid shareholders $0.10 per share on a quarterly basis. It raised the dividend to $0.11 in June 2010.

Figure 7.3 American Eagle Outfitters’ Dividend History

Source: Dividata.com

image

Figure 7.4 Dividend Payment History for American Eagle Outfitters

Source: Dividata.com

image

Then in December the dividend spiked to $0.61 but immediately went back down to $0.11.

On December 2, American Eagle declared a special $0.50 per share dividend on top of its regular $0.11 quarterly dividend. So shareholders received $0.61 per share that quarter.

A company may declare a special dividend for a number of reasons. One of the most common is because shareholders demand it. We saw that in 2004, when Microsoft, sitting on billions of dollars in cash, paid shareholders a special dividend of $3 per share. The payout barely put a dent in the company’s cash stash but somewhat appeased investors who were unhappy that the company was hoarding ...

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Publisher Resources

ISBN: 9781118282342Purchase book