Unlisted Companies Join the Special Dividend Parade
|Dec 6, 2012|
The past several weeks have seen a flood of companies announce special dividends in advance of almost certainly higher tax rates to come in 2013. While perhaps less noticed by the financial community, unlisted companies have been active participants in the trend.
I compiled a short list of non-financial companies that have declared special dividends and the details of each. Some of these dividends have already been paid, while others are upcoming. This list is by no means complete. If you know of other unlisted stocks issuing special dividends, feel free to comment.
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Mestek and TNR Technical's dividends are notable because they both represent a significant portion of each company's market capitalization.
TNR Technical is a modestly profitable battery seller with tons of excess cash on the balance sheet. The company trades at a P/E of 8.7, EV/EBITDA of 2.4 and 78% of book value. After paying out the $2.75 special dividend, the P/E falls to 6.6 and price-to-book value falls to 73%. It should be noted that TNR Technical has a market capitalization of only $3.46 million before considering the special dividend and just 307,119 shares outstanding. Not investable for many.
Mestek (which I wrote about here) manufactures and distributes HVAC and metal forming equipment. The company termed its special dividend a "loyalty dividend," writing:
"John E. Reed, Chairman and CEO of Mestek, remarked that he is pleased to reward shareholders who have exhibited loyalty and belief in Mestek, especially during the past four years given the depressed conditions in the construction and machinery markets which Mestek serves."
Despite these depressed conditions, Mestek continues to profit. After the payment of the special dividend, Mestek will have a P/E ratio of 8.3 and an EV/EBITDA ratio of 4.1. If the company's end market rebound, that P/E could drop rapidly as profits rise. Mestek's stock is very illiquid and any interested investors should proceed with caution.