As we previously mentioned, special dividends are “in” this holiday season, as a few more firms declared one-time dividends. Louisiana-based bank Teche Holding Company (TSH) announced that it will pay out its regular quarterly dividend of $0.365 per share with an additional payment of the same amount. However, the firm intends to skip its dividend in the first quarter of 2013, and it was careful not to commit to resuming its dividend in the second quarter, though it says it is likely to resume. Teche is a pretty obscure bank with a market capitalization under $100 million, but the situation underscores the uncertainty felt by so many firms at the current juncture.
Retailer Stein Mart (SMRT) followed suit, declaring a special dividend of $1 per share (roughly half the company’s cash balance). This comes on the same day the company finally reported strong same-store sales, which jumped 7.1% year-over-year compared to a year-to-date gain of 2%. We think this move by the debt-free retailer signals confidence in the holiday season, which should help restore the firm’s cash balance. Stein Mart previously declared a $0.50 dividend in December of 2010, and the latest dividend clearly benefits interim CEO and Chairman Jay Stein, who remains the largest shareholder.
Guess (click ticker for report: ), which has struggled throughout 2012, also declared a special dividend of $1.20 per share to be paid out this December. The company has seen sales dip 3.6% year-to-date, which has helped send operating income down 45%. Unlike some of the other firms we’ve seen pay special dividends, which have performed well enough to generate large cash balances, Guess has been unable to recapture its momentum from late 2010. Shares are down almost 50% from its 2010 highs. Although $1.20 won’t be enough to compensate shareholders for a 50% decline, we think the return of capital is a solid move for a company with too much cash sitting on its balance sheet.
Another cliff-related dividend story came out of Disney (click ticker for report: ), which boosted its annual cash dividend 25% year-over-year to $0.75 per share, to shareholders as of December 10 and payable on December 28. Though Disney’s largest private shareholders are now the descendants of Steve Jobs and George Lucas, neither likely “needing” the money, we think the company found it prudent to return cash to shareholders before a change in the tax code.
Although we expect the trend to continue, we remain uninterested in speculating on a certain company for the sake of capturing a special payout. Though some criteria, like excess cash and large insider holdings appear to have a predictive quality, neither characteristic is a guarantee.