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Non-Tech : Special Situations Value Investments
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From: NikhilJog7/26/2011 8:13:33 PM
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Sara Lee (SLE) - Assured 20% Return and some more - Case of Special Dividend

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


Given the possible market downturn in the 2H-2011, investors looking for cash maybe better off looking at SLE as a 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 as part of the SLE breakup..

How do we earn 20%? Here is how -
  1. 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.
  2. Additionally, SLE has a current annual dividend yield of approx. 2.5%.
  3. Another few points can be earned from appreciation in the stock price as everyone rushes in to earn the special dividend. Adding this capital appreciation will generate more than 20% return on the investment.
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