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This Monthly Dividend Stock Is Up 22% In 2 Months


  • HDS+ subscribers just made a total return of 23.35% in two months on a buyout deal.
  • It's a monthly high dividend stock that pays in US dollars.
  • It's being acquired at an 18% premium to its previous 52-week high.

HDS+ portfolio holding Student Transportation Inc. (STB), also known as STI, is being acquired by an investor group - CDPQ and Ullico, for a price of $7.50 US per share. The parties expect to close the transaction by the end of the second quarter of 2018.

This represents a substantial price gain/share for Hidden Dividend Stocks Plus subscribers, of $1.36/share. In addition, we've received two monthly dividends of $0.0367/share, for a total profit of $1.4334/share.

The total return is 23.35%. Since this profit happened within a short, two-month period, the annualized profit is huge, at 140.10%.


"Student Transportation Inc., (also known as STI), today announced that it entered into a definitive agreement (the "Arrangement Agreement") with a company (the "Purchaser") sponsored by Caisse de dépôt et placement du Québec ("CDPQ") and Ullico Inc. ("Ullico", and together with CDPQ, the "Purchaser Group") pursuant to which the Purchaser Group will acquire all of the Company's outstanding common shares (other than common shares already owned by the Purchaser Group) by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (Ontario)."

"Shareholders of STI/STB will receive US$7.50 per common share in cash, representing a 27% premium to the 20-day volume weighted average price per common share on the Toronto Stock Exchange for the period ending February 27, 2018, based on an exchange rate of $1.2776 Canadian dollars per U.S. dollars as of February 27, 2018."

"This transaction presents a compelling opportunity for our investors to monetize their investment at an attractive price. CDPQ has been invested in our company for 16 years and for most of that time as our largest shareholder."

CDPQ currently owns approximately 8.4% of the outstanding common shares of the company.

"We will continue to be the North American leader in student transportation and

If you're interested in discovering other attractive income vehicles, we urge you to try a 2-week free trial period for our new service, Hidden Dividend Stocks Plus, on the Seeking Alpha Marketplace. Our service focuses on undervalued and undercovered dividend stocks and income vehicles, with yields ranging from 5% to 10%-plus.
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This article was written by

Double Dividend Stocks profile picture

Robert Hauver, MBA, aka “Double Dividend Stocks” was VP of Finance for an industry-leading corporation for 18 years and has been investing for more than 30 years. He focuses on undercovered and undervalued income vehicles and he leads the investing group Hidden Dividend Stocks Plus.

With Hidden Dividend Stocks Plus he scours the world's markets to find solid income opportunities with dividend yields ranging from 5% to 10% or more, backed by strong earnings. Features include: a portfolio with up to 40 holdings at a time including links to associated articles, a dividend calendar, weekly research articles, exclusive ideas, and trade alerts. Learn More.

Analyst’s Disclosure: I am/we are long STB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (19)

Don't forget Canada's 15% tax on distributions. Not a good deal. Invest at home.
Double Dividend Stocks profile picture
Foreign taxes paid on Canadian stocks can be recouped on US tax returns.
Thanks for reading.
Cutter111 profile picture
I've held STB on the TSX for a few years and happy with the sale. DDS, How about KWH.UN or HOT.UN on the TSX as replacements? Both look very attractive at current prices.
Looked at this company for the last 3 years but never bought . I am sorry now I never bough it , I just liked the demand curve for its product . hmmmm simple business in the end ...drive kids to school and make a profit . Anyway , Congrats to the longs ! There was some lean years BUT on the whole a solid company ! moving on to smoother buys right now . I like BX (Blackstone)in the trump era , especially with infrastructure spending - they just took out my Best REIT AAR.UN , Pure industrial REIT , great buy for BX ( Market cap 50 B+) , they are poised to buy many companies soon , as they are sitting on tons of cash !I will miss AAR.UN but I did get a large premium from BX . M&A activity is picking up . BX( Blackstone) will be a leader in this activity !
Double Dividend Stocks profile picture
Hi javar,
Yes, it was a simple biz model for STB. Thanks for your input.
have owned STB since 2007 when listed on the TSX only. brought Denis Gallagher to 2 of our investing conventions ('07 & '10) & added more on dips (did trade a bit in the Ira's). good for Denis & the folks @ STB for running a good business with sound business model. we plan on holding thru the June dividend, already have our advisor starting to poke around for another STB type investment that pays qualified dividend. it's been our largest holding for yrs.
Double Dividend Stocks profile picture
Hi RS,
Congrats. Thanks for your input.
Congratulations everyone. Where to reinvest is a nice problem. I like DDS too.
Double Dividend Stocks profile picture
Hi KL,
Thanks for your support.
I like to place an order to buy any stock for 2 to 3 % lower than I think is a fair price and stay patient to see if my order is fulfilled. This makes me behave less emotionally. Example, I see a pair of shoes that I love @$60 that i must have, then the following week they go on sale @ $52. That's an example of an emotional buy, Yes, I'm a woman, I admit it. From experience, every time I buy a stock, it goes DOWN 2 TO 3 % within the next few days. Story sound familiar to you? If my automatic buy order doesn't happen in a week to 10 days, I know it just wasn't meant to be. My objective? Only buy on stocks on sale.....especially when the entire market takes a 300 dive. Try to stop your losses before you ever buy.
This works for me about 50% of the time.
Likewise, WSLegend, I have owned STB for years and have enjoyed a double digit cash yield on my cash cost, and now will enjoy a triple digit capital gain. The same approach that led to success with STB and others in my portfolio, continues to work solidly: Really, truly, deeply understand the cash flows. In STB's case, the noise was around sustainability of the dividend in light of capital expenditure requirements for school bus replacements. In my opinion today, US$7.50 for STB is still light by a dollar or two because the sustainable yield of 5.87% is well above the long term cost of debt capital, and we may well see a competitive higher offer that takes out the break fee and pays e.g. US$9 per share, which would be a sustainable yield of 4.89%. So I am continuing to hold STB because my downside is supported by the CDPQ bid, and my upside is a further 20% on a higher offer.

On new investment ideas, I am investing in Cominar, which has a language and cultural moat around their Quebec-based field of real estate dominance, their regional economy is outperforming, large respected hedge funds are buying bricks and mortar retailers, their dividend is sustainable within existing cash flows and yields 8.28% and P/E is just 11.9x.
I'm doubtful we'll see a 3rd party try to crash this deal. It looks like the board are all convinced this is a good deal and the poison pill on the deal isn't trivial at $25mill. But unless I see a great opportunity and don't want to leverage up, will hold my STB until the end.
Denis G. replied on Stocktwits that "No the deal should close beginning of May.", so we won't have long to wait one way or another. http://bit.ly/2FRTTZj
Double Dividend Stocks profile picture
Thanks for that info.
Smarty_Pants profile picture
"Now where do you invest the money from STB?" - WSLegend

Some other stocks to consider, and also previously covered by DDS, and well run companies. The price of these businesses has been languishing since the price of oil dropped back in 2016. They offer higher yields than STB and should Mr. Market regain his senses, their prices could also rebound to levels not seen for at least 3 years. Revenue for all three businesses is generated on long term fixed rate contracts, so the top line is quite stable regardless of the price of oil or natural gas.

I'd recommend a thorough review of the most recent Quarterly calls and financials to be sure you have confidence in the stability of their operations going forward, before investing. Like most other MLPs in the energy space, their unit prices are volatile despite their stable revenue.

GLOP - an LNG shipping MLP which issues a 1099
KNOP - an oil shuttle tanker MLP which issues a 1099
USAC - a natural gas compression MLP which issues a K-1
Double Dividend Stocks profile picture
Hi SP,
Thanks for your input and your support.
WSLegend profile picture
Great timing on you pick, but I have owned STB for years. Now where do you invest the money from STB?
WSL, I've got the same problem. STB remains my largest holding, even after taking a quick profit to wipe out my small margin amount. My yield on cost was near 10%. I was counting on STB being my dividend engine for a long time to come. I've started researching come CEF's.
Good luck
Many mlp’s are currently on sale! While they are not monthly payers, the distributions are nice! What I’ll miss about stb is it’s qualified dividend status!

ENB, MMP, and EPD have dipped significantly.. also many BDC’s have pulled back nicely! As well as many preferred’s... if it’s just bond proxies you are looking for!
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