One-Time Dividends Today Versus Past (GRMN, LTD, MSFT, AXE, INSP)

Limited Brands Inc. (NYSE: LTD) earlier on Monday declared a special dividend of $1.00 per share and it simultaneously authorized a $200 million share repurchase program.  We had roughly $1 billion listed as the cash and equivalents in the most recent balance sheet, and with close to 322 million shares this will chew up about one-third of its cash.  Add in the buyback and Limited will have used half of its cash.

As far as whether this was good at Limited, it was in-line with what the dividend was.  Shares closed up $1.00 at $24.71 yesterday after the Monday evening news.  The newly authorized $200 million repurchase program includes $31 million remaining under a prior $250 million plan.  The company has advocated  dividends, spin-offs, buybacks, and other shareholder-friendly initiatives throughout its history.

As noted, some dividends are good.  Some are not.  Take Microsoft Corporation (NASDAQ: MSFT).   Microsoft’s special $3.00+ one-time dividend was meant to partly clean out the coffers after a generation of building the mountain of cash.  But the split adjusted price of the time was roughly $24.00 if you average out the November and December prices after that.  Shares are close to $29.50 today and the stock was under $20 most recently until about May of 2009.

At the time, Microsoft had no real choice in the matter over what to do with the cash.  The antitrust issues were fresh enough that it could not have done any major acquisition, so it had little choice but to deploy its cash in the manner it did.  Still, the math does not really speak strongly that the one-time dividend did anything for holders long-term.