Imperial Sugar's Fat Dividend: Grandma Was Right

Grandma called from Northern California to let me know that Imperial Sugar (IPSU) announced a special dividend of $3.00 per share. When I wrote my blog entry in late September, IPSU was trading around $29. I thought the stock was getting too much attention because ethanol prices had driven up sugar prices in the short term and that the stock would eventually suffer when ethanol and sugar prices fell.

I couldn't help but tease my 85 year-old grandmother at Thanksgiving as the stock fell to $21. The sugar company is now trading at $26 and holders on December 26th get that extra 3 bucks as a dividend. I'd be at break even today had I bought the stock back in September. I think Grandma must have been watching the stock fall and been frustrated that I went against family - now Grandma has the last laugh.

Like I said back in September, Grandma usually a better stock picker than I am. She held the stock at $21. I guess when you reach 85 you have pretty good instincts. I'd be happy just to make it to 85, good instincts or not.

First Call estimates are $2.50 for 2007 and $1.80 for 2008 which gives P/E's of 10 and 14 respectively. Unless we get a pullback (like the one I missed at Thanksgiving), I still cannot call this company a value stock.

IPSU 1-yr chart:

Disclosure: I do not own Imperial Sugar (IPSU) though I may buy on a price decline (which I didn't during the last price decline). I love my grandmother and am on her side in most things. I didn't make it home for Thanksgiving to see Grandma this year but I plan to be in California next year for the holiday. Grandma prefers Valueline (those big fat paper books) for her research. I tend to use online resources. Good grandsons do not tease their grandmothers.