The reason is to pay 15% cap gains on the stock rather than next year which will be at least 20% and in future IMO they will revert it back to reg income which will then be higher still. Selling now + paying 15% then buying it back sets a new cost basis for the stock. Future stock appreciation would be at the new basis not the outsized gains I have now. The purpose is to mitigate taxes paid and still own the stock for divvies + cap appreciation.
Joe and Kid are totally right. I am in the same boat although I have not owned MO and PM for as long as they have, I wish I would have. Just buy these 2 reinvest the divys and you will be very well off with the accumaulation of more sahres and the ever increasing dividend hikes. I bought my MO back in 2010 and now have a average price of 19 a share and my PM I just bought back in Febuaray this year at 75 and change. I plan on holding em for years to come unless something drastic happens to the tobacco industry.
The split will be revenue neutral as was the MO/PM/KFT split. The thing I'm not crazy about with KFT is the large debt load they carry. Not sure how that will be distributed on the split along with cash + what the divvy will be for each entity. The debt will hamper its growth through any further acquisitions. MO/PM carry large debt but there is a reason. Its gives them a shield against law suits and their cash flows are stronger.
Not bad. You're not looking to hold onto the KFT for the split up of that one into extra shares? I can see the desire to keep the MO and PM, but the high yield KFT side after the spin-off would be a nice diversification though, no?
I have owned mine for over 30 years + kept buying in my 401K. I did move it to a taxable acct. You may want to consider selling it all + buying it back while cap gains is at 15%. It will go up next year to at least 20% and in future who knows, my guess it will go back to reg income.