Sara Lee (SLE) - Assured 20% Return and some more - Case of Special Dividend
Company: Sara Lee. Currently trading at: USD 19.59
Situation Or Trade: Upcoming USD 3.00 a share special dividend in addition to the current 2.5% annual dividend yield.
Timeline: 6 months
Catalyst : This stock will see a huge uptick when this special dividend gets announced. Next earnings call is on 11-Aug-2011. Investors not only earn the dividend but will also make money from capital appreciations.
Given the possible market downturn in the 2H-2011, investors looking for cash maybe better off looking at SLE as a stock to invest in. There have been many reasons I invested in SLE, but one that might interest investors in the near future is the special USD 3 a share dividend that the company stated it will pay investors as part of the SLE breakup..
How do we earn 20%? Here is how -
- SLE stated that it will pay USD 3.00 a share special dividend as part of its separation plan; a 15.4% return on the current share price of USD 19.59.This is expected in the next 6 months.
- Additionally, SLE has a current annual dividend yield of approx. 2.5%.
- Another few points can be earned from appreciation in the stock price as everyone rushes in to earn the special dividend. Adding this capital appreciation will generate more than 20% return on the investment.
Disclosure: I am long SLE.