Hoping for More Special Dividends
December has been a popular month for acquisitions but also the payment of special dividends. With the real possibility of dividend tax rates jumping significantly in 2013, many aren't taking any chances with respect to future tax rates. In some cases such as Wal-Mart (WMT), the regular quarterly dividend payment date has been moved up to December from January to avoid the higher tax rate. Just last week Costco (COST) announced a special $7 per share special dividend. I suspect before the year is out another batch of special dividend payments may be made.
A few weeks ago, I suggested investors take a closer look at retailer Stein Mart (SMRT) and online pet pharmaceutical company PetMed Express (PETS) due to their depressed share prices coupled with their cash rich balance sheets. PetMeds was trading for less than $11 a share with over $3 per share in net cash. They recently announced a $1 per share special dividend. The stock now trades for $12.25. I was even more bullish on Stein Mart because it stands out to me as a high quality discount retailer. I've seen shirts at Stein Mart that sell for a fraction of what Bloomingdale's charges. The balance sheet is pretty as well with no debt and over $2 per share in net cash. Insiders own nearly 40% and Stein Mart has a history of paying out special dividends to shareholders -- not a surprise with such high insider ownership. Last week, Stein Mart also announced a $1 per share special dividend when the stock was trading for around $7.50. The shares now trade around $8.35, which is still a good price for a quality retailer serving a growing consumer desire for discounted fashion....360 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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