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High Yield Dividend Portfolio; I target a minimum 10% return on price *and* a minimum 5% for dividend yield. Early retiree, father, and grandfather. Seeking alpha n00b. Opinionated SOB. Radical liberal conservative libertarian (I VOTE FOR NONE OF THE ABOVE!). I'm actually a Marxist - of the... More
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PandA Trader - High-Yield (5%+) Dividend Stocks with High Annual Return (20%+) & Other Adventures in Trading the Day
  • SCMR And $10.00 Special Dividend 2 comments
    Sep 22, 2012 4:33 AM | about stocks: SCMR

    One of my blog readers asked;

    Question: For a stock like $SCMR which announce a 10 special dividend on Oct 1. is it worth playing?

    Since I was not familiar with this symbol because it's not a regular dividend paying stock, I had to do a little research.

    This is my answer;

    Thank you for commenting!

    Whether you play it or not, you must weigh the risk versus the reward.

    Currently, the stock is trading at $15.45 so that is your risk.

    The reward is $10 for that risk.

    But, there are other considerations; you need to be a holder of record on October 1st, which ordinarily means you must already own the stock 3 business days before, and that is normally on the ex-dividend date.

    But, this is a 'special dividend', subject to special rules. The 'ex-dividend' date is actually the day after the dividend is "PAID". Confused? Yeah, me too.

    The last time they did this, back on 12/1/10 they declared a $6.50 special dividend, the stock closed almost $6.50 lower than the previous day ($30.01 vs. $25.25), and then closed @ $27.27 on the pay date.

    The very next day, the ex-dividend date of 12/23/10, the stock opened @ $20.50 and closed @ $20.82.

    Now, consider that the stock had a 3-year high of $34.31 back on 10/15/10, and then went to those price points already described.

    I don't know what the price action will be for this latest special dividend, but you should probably check out their website; and other sites as well.

    I would recommend and for starters.

    So, I can't really tell you if it's worth playing, but if you feel lucky sometimes you just gotta roll the dice. I probably won't take a big bite on this stock, but I might nibble at it a bit. (I just bought 25 shares on a roll of the dice!)

    Thanks again, and good luck!

    So, was this the right answer? Was it a good answer? I don't know. I took a nibble, though.

    We'll see…

    Stocks: SCMR
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Comments (2)
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  • exceller78
    , contributor
    Comment (1) | Send Message
    Nearly 90 percents of the outstanding stock is held by the founders. During the book, this stock raised over $1 billion in IPO. COmpany has never made a net profit in 12 years. Special dividend is the clever way to suck the money out of the company to its founders without diluting their holding ! Think about it !
    17 Oct 2012, 05:44 PM Reply Like
  • panda317
    , contributor
    Comments (142) | Send Message
    Author’s reply » Thank you for your comment. Actually, it's more like 30% insider-owned. Special dividend is returned to the shareholders, so it is a way to extract money but that is the intent with a special dividend. It's not really a return of capital. I like the price action since the ex-dividend date, as it has gone from the opening low that day of $4.74 to as high as $6.36 yesterday before closing at $6.17. I am long this position.
    18 Oct 2012, 08:41 AM Reply Like
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