Investing

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

Anixter International Inc. (NYSE: AXE) had a special dividend of $1.50 paid out in March 2004 and shares were around $29.00 if you average out the prices afterwards.  Its shares rose and rose even if you consider that the 2009 lows took it all the way back down.  At $47.00+ today, it is hard to say that the company hurt itself with a one-time payment.

And we can’t leave off the case of InfoSpace Inc. (NASDAQ: INSP).  In Jan-2008 it paid out a special $9.00 dividend and in May-2007 it paid out a $6.30 dividend.  That took the company’s cash down to more of a normalized operation level and it now sits on roughly $225 million in cash and equivalents.  It depends upon how you look at the company’s disappointing history to say whether this was a good deal for holders.  With a market cap of $400 million it is not impossible to rule out another payment ahead.

InfoSpace could pay out more than $6.00 today if it wanted to take its cash down to the wire and leave just enough to close out its liabilities.  If it lives up to its analyst estimates, that is doable.  If you owned before and held on since the first one-time and second one-time dividend, this made at least some sense for the company unless you think it could have acquired itself into a better position with the cash.

There is a quote from a WSJ article in 2004 which I have saved on the matter which says: “Special payouts are good news for shareholders, of course. But some analysts warn investors not to get excited about these windfalls, saying that special dividends are not necessarily an indication of better things to come at a company or a reason to buy a company’s stock.”

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JON C. OGG