tag:blogger.com,1999:blog-6587699706949333863.post6856909247541036174..comments2024-03-27T23:39:33.499-05:00Comments on Passive Income Pursuit: What do you think of Costco's Special Dividend?Passive Income Pursuithttp://www.blogger.com/profile/13947101854482544346noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6587699706949333863.post-31538133148692114612012-12-02T11:15:00.962-06:002012-12-02T11:15:00.962-06:00Chad,
That's interesting that there's a ...Chad, <br /><br />That's interesting that there's a fairly recent precedent of the same thing. I'm not sure how Dean Foods was at the time but I think Costco can absorb this, it just doesn't make any sense to me. Cash on hand would be one thing but taking on extra debt for no purpose other than paying a dividend is crazy. Unfortunately it's the small shareholders that are rejoicing after the announcement but it's the insiders and institutions that are really making out like bandits by deals like this. <br /><br />Thanks for stopping by!Passive Income Pursuithttps://www.blogger.com/profile/13947101854482544346noreply@blogger.comtag:blogger.com,1999:blog-6587699706949333863.post-37878931602180973912012-12-02T09:26:49.565-06:002012-12-02T09:26:49.565-06:00I was working for Dean Foods when they did this ex...I was working for Dean Foods when they did this exact same thing about 7 years ago. They took on a massive load of debt to pay a $15 one time dividend. At the time I thought it was a horrible move for the company. Turns out it was. DF went from a $60+ price to down to around $7.50. The interest about killed the company. They ended up having to sell some stock to pay down the debt. The CEO owned 2 million shares so it was a nice $30 million payday. Most of the small shareholders were so much worse off after this deal.Chadnoreply@blogger.comtag:blogger.com,1999:blog-6587699706949333863.post-76651955273759225002012-12-01T07:32:22.878-06:002012-12-01T07:32:22.878-06:00CI,
When I first heard about it I thought it was...CI, <br /><br />When I first heard about it I thought it was really nice of them to do this. But then I looked into it more and was put off by them going into more debt just to pay the special dividend. I would be more understanding if they were taking on some cheap debt to fuel expansion because money is super cheap for companies right now, but just to pay a dividend doesn't make sense to me. <br /><br />Thanks for stopping by!Passive Income Pursuithttps://www.blogger.com/profile/13947101854482544346noreply@blogger.comtag:blogger.com,1999:blog-6587699706949333863.post-64365601837115046292012-12-01T05:49:15.680-06:002012-12-01T05:49:15.680-06:00It sounds like a poor long term decision. If they...It sounds like a poor long term decision. If they just paid it from cash it's one thing, but do go in debt? Compounding Incomehttps://www.blogger.com/profile/04207986983526689578noreply@blogger.com