No. of Recommendations: 5
So Ruger is paying a special $4.50 dividend in a few days.

I wonder it this is a play for folks with high income.

One can assume the stock will drop after the dividend. One can also assume tax rates are likely to go up next year.

Ergo, buy the stock, hold to next year....and IF all things are equal, you pay taxes at a 15% rate on the dividend....and when you sell the stock for a loss, your tax loss is worth say 30%. Obviously, if the stock doesn't go down, you still make money which is good....the risk is the stock taking a dive bigger than the dividend.

Now, we aren't doing this at the firm....methinks even if it would be good for our clients, it would be outside the methodology we use pursuant to our contract, and so we really shouldn't do it. Ethics, doncha know....

BUT....for other folks, I wonder if this would be a good idea. Posting here since it seems to be the most active board regarding dividends, and figure you guys may see flaws in my thoughts.

Disclosure: I personally own RGR and we also own it for clients.
Print the post Back To Top
No. of Recommendations: 0
I do not own RGR but I do own several other stocks with large special dividends. I am planning to track how these do in the run up to the ex-div date and after. The largest sp. div. is ARDNA, $20 or essentially 20% when it was announced.

sw
Print the post Back To Top
No. of Recommendations: 0
Hey Hochizen,

So Ruger is paying a special $4.50 dividend in a few days.

So if I understand this correctly you are saying the the
Dividend Ex date will be in a few days?

Ruger's website only shows: The Company also announced today that its Board of Directors voted to declare a quarterly dividend of 14.1¢ per share on the Company's issued and outstanding shares of common stock. This cash dividend will be paid on November 28, 2011 to stockholders of record as of November 14, 2011.

TIA,

Rich
Arizona
Print the post Back To Top
No. of Recommendations: 3
The announcement of the special dividend came on November 19...
Sturm, Ruger & Company, Inc. (RGR) announced today that its Board of Directors voted to declare a special dividend of $4.50 per share on the Company’s issued and outstanding shares of common stock. This cash dividend will be paid on December 21, 2012 to shareholders of record as of December 7, 2012.

Since the Ex-Dividend date is always two business days before the Record Date, or December 5, you'd have to buy the stock by close of business on December 4 in order to be entitled to receive the dividend.

Of course, if the "Mayan prophesy" comes true and the world ends on December 21, none of this will matter...:) I hate when that happens.
Print the post Back To Top
No. of Recommendations: 1
Hi Rich,

info from above poster is correct. Not saying RGR is a buy right now....after all, it just hit 52 week high....but was just wondering if my logic was correct regarding the tax situation.

of course, what is REAL fun is that all the shorts either have to cover or pay the dividend! Just before year end, they get to either take a loss or write a check...heh heh heh heh
Print the post Back To Top
No. of Recommendations: 0
Gotcha ... Thanks guys,

Rich
Print the post Back To Top
No. of Recommendations: 2
Looks to me as if they are borrowing the money to pay this dividend. It is not for me. I can't imagine what paying that dividend will do to the stock price. The stock price should drop by the amount of the dividend and that would be negative.

brucedoe
Print the post Back To Top
Advertisement