Sunday, 9 November 2014

Special Dividend (and an adjusted Annual Target...again)

One of my most recent purchases was the speciality insurer Lancashire Holdings (LSE:LRE). The company I noted had a fairly unimpressive standard dividend history but had the unconventional practice of delivering regular and often significant special dividends.

They have done this again with their Q3 results. The results showed that they intend to pay a $1.20 per share special dividend in December. This is equivalent to about 75p per share and considerably above the 58.8p predicted for the whole year. That is a huge chunk of cash returned on a company I bought into at 664p a share. In fact, it is about 11%.

Ordinarily, I would not find these sorts of high-yielding companies attractive. However, in Lancashire I find myself not unduly worried. Their method of delivering the cash through special dividends means that--when necessary--they can easily retain cash in the company when it can be put to good use. However, when no such good use can be found they are pretty content passing it on to investors.

This is great news for my dividend income for the year. However, it does mean that my new 2014 income goal of £250 seems pretty pointless as a target as with Lancashire income alone will push me beyond this. I am thus going to up it even further to a proper "hard but not impossible to obtain" target of £350.

This new target will be harder to reach before the end of the year. However, it is certainly possible especially if I still intend to deploy money for investment in the last two months (which I do). That being said, the likelihood of them providing dividends before the year end is slim. Nonetheless, targets are supposed to be hard to hit and seeing as I have already hit two of them this year it is worth upping the stakes a little.

[Creative Commons image reproduced from Flickr user Jim Kelly]

No comments:

Post a Comment