posted
This seemed to have went under alot of radars. http://biz.yahoo.com/prnews/080228/lath137.html?.v=22 At .20 now this is a 50% gain. ECRO has done this yearly but the PPs was much higher so the cash distribution was less effective. Even at 50 cents a 20% gain is not bad.
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posted
The key here is to try and figure out if the PPS will rebound after the Dividend is paid.
You have to remember that the 10 cents you receive will automatically be subtracted from the PPS. So it will open 10cents lower the day after the Ex-date.
This could also get tricky. If it ends up that the Divy is worth 25% or more of the PPS the following rule will apply.
Dividends Or Distributions 25 Percent Or Greater Than Security Value
The second method, under subparagraph (b)(2) of Rule 11140, provides that for dividends or distributions that are 25 percent or greater of the value of the subject security, the ex-date shall be the first business day following the payable date. For example, if an issuer has announced August 10 as the record date and August 31 as the payable date, then the ex-date will be September 1, the first business day after the payable date. In this example, September 1 is the day on or after which a buyer would purchase the security without the dividend and, therefore, the day on which the price of the stock is adjusted downward. In this example, a seller of the security on August 15, even though the holder of record to receive the dividend, would have to relinquish the dividend to the buyer. Indeed, because the value of the security on August 15 has not yet been adjusted downward to reflect the dividend distribution, the seller in this example would be unjustly enriched by keeping the dividend. The seller would have received the value of the dividend twice: first, as fully reflected in the unadjusted price of the stock on August 15; and secondly, as subsequently paid by the company to record date holders.
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