Q: I have held a position in Winpak (WPK) for over a year and have done very well with it. I intend to continue holding, but am a bit perplexed by their recent announcement of a special $1 per share dividend. The announcement came without any explanation. Now don’t get me wrong, I don’t want to look a gift horse in the mouth and think it’s great when companies give back to shareholders. My understanding however is that special dividends typically occur after an asset sale, or in response to shareholder pressure when a company is flush with cash. Winpak’s current regular dividend of only 12 cents amounts to less than 0.5% yield. The $1 special dividend could have been used to finance doubling the current regular dividend for the next 8 years! Can you explain what management is doing here with the special dividend?
Thanks
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