TransDigm Group: Quick Cash from Special Dividends

Special dividends really can be something to behold for income investors and we found one that dividend seekers may want to consider sooner rather than later. TransDigm Group (TDG), a maker of aircraft components, has authorized a one-time special dividend of $7.65 a share. The dividend will be paid on October 26 to shareholders of record on October 16. So you'll have to act fast.

We should note that TransDigm doesn't pay a regular dividend, but the stock is nearing its 52-week high and is up about 32% in the past three months, so this is no slouch of a stock. The company said the recently completed sale of $425 million in senior notes along with $190 million in free cash will be used to finance the special dividend.

This is a powerful special dividend to be sure. Let's say you buy just 100 shares of TransDigm at $48 (near Tuesday's closing price) and the stock doesn't move for a while. With $765 in special dividends coming in, you've locked in a 15.9% return right off the bat. Sounds good to us.

Comments

[mbkelly75:]

Well done - thank you

Oct 08 06:35 PM

[Dividend Gr...:]

A 15.9% return you say.. And of course you do not expect the stock price to fall by 7.65/share on the ex-dividend day, do you?

Oct 09 09:24 AM

[Michael D.:]

Weird...they sold debt to pay a dividend.

I would look closer at the board and non-arms length shareholders (the executives). Are they thinking about the long term of this company, or setting themselves up?

Oct 09 09:57 AM

[User 371646:]

Ernesto

When are they supposed to pay this special dividend? Oct 26 is today and I have not seen this payout so far. I am writing this
at 8:30 pm. Does anybody know?

Oct 26 08:21 PM