Saturday, July 23, 2011

Sara Lee (SLE) - Assured 20% Return and some more - Case of Special Dividend

* I hold a position in this company since the last 4 months.

Company: Sara Lee. Currently trading at: USD 19.59
Situation: Upcoming USD 3.00 a share special dividend in addition to the current 2.5% 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.

For those of us wanting some cash in hand, given the possible market downturn in the 2H-2011, SLE might be a good 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.

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 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 dividend. Adding the capital appreciation will generate more than 20% return on the investment.

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