Does everyone have to agree to receive the shares or can we each decide which we want?
If we all decide to take the share, it will not be a taxable event and we will get them at a $5.98 share price (less 5% commission) -- and current price is $6.76.
So the election for shares seem like a pretty good deal -- so long as the overall price is not lowered by the new influx of newly created shares.
So is the price of $5.98 already set that we would get the shares at in lieu of dividend? I didn't see this anywhere (didn't look to hard). My E*trade account says I can make a decision to take shares but does not name at what price. If I do nothing I get divy in cash.
So is the price of $5.98 already set that we would get the shares at in lieu of dividend? I didn't see this anywhere (didn't look to hard). My E*trade account says I can make a decision to take shares but does not name at what price. If I do nothing I get divy in cash."....
Get a new broker. The SFL press release specifically states:
Shareholders electing to be paid the dividend in newly issued common shares will receive 0.0528 common shares for each share held by such shareholder as of the record date of March 9, 2009. The calculation is based on the volume-weighted average shareprice of $5.98 on the New York Stock Exchange during the three trading days ending March 4, 2009, less a 5% discount. If all shareholders elect to receive common shares, the Company will issue 3.8 million of newly issued common shares.
All shareholder elections must be received no later than 5:00 p.m., New York City time, on April 13, 2009.
The price set is $5.68 not $5.98. Anything above $5.68 is pure gravy. If, say, you own 1000 shares and and you elect to take the .30 cash divi, you get $300. However, if you decide to take the shares then you mulitply the number of shares you own by .0528 which will give you 52.8 shares (you'll probably get cash for the fraction) and let's say SFL closes at $7.50 by the deadline date, you pick up $396 instead of $300.
My broker wants my selection by 5:00PM, April 8, in order to meet SFL's deadline of April 13. You'd better ask your broker when he needs your decision for the share choice.
This should clear up the dividend question once and for all.
SFL website states average price of stock div is 5.98 per shr.
More importantly, you get .0528 shrs of stock for each shr you currently own.
So if you own 1000 shrs you get a cash div of 300.00, whereas if you take the stock dividend you will receive 52.8 shrs.
Multiply 52 x current price of 6.77 you get a stock dividend value of 352.04; a 17.34% increase over the cash div.
Depends on what your preference is, cash, which represents taxable income in the current year, or a stock dividend whth a possible higher return, which is not taxable until you sell it & realize a capital gain.
My broker has given me until 04/0709 to decide on which option I want to accept. If the stock dividend value remains higher than the cash div at that time, I will opt for the stock dividend.
Who knows, I may just hold the stock dividends until such time I am in a lower tax bracket to minimize the tax bite.
Each has to decide in accordance with their own circumstances & priorities.
Pursuant to a prospectus supplement filed with the Securities and Exchange Commission ("SEC") on March 6, 2009, shareholders may elect to receive the dividend in the form of newly issued common shares of the Company. No action is required to be taken by shareholders wishing to receive a cash dividend.
...."No, it's up to each individual. I am taking the shares. I called Ameritrade and they arranged it for me. Just call your broker."....
Smart boy, it's a no brainer. At .0528 times the number of shares you own times the price of the stock you sell it at (closed over $7 today), you pick up an extra stipend on top of the .30 divi and you can hold off making your decision just before the April 13 deadline (in my case my broker wants my decision by 4/8) when SFL must report what the shareholders decide to Mellon Bank.