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National Presto Industries Inc. Message Board

  • jrad52 jrad52 Dec 15, 2003 8:51 AM Flag

    Dividend hope

    Actually, I don't care too much about the new pizza maker unless it's a big hit, which I doubt. I bought NPK recently for 1 reason - the hope that, with the new 5%/15% tax on dividends, NPK will at least go back to the $ 2 dividend, or else will pay out a significant one-time special dividend.

    I have no idea how such a dividend might fit into the Cohen's estate planning, which is probably the deciding factor in any dividend (great owning stock in a public, but really private company). Nonetheless, considering how little interest the money earns for NPK, distributing more cash would be great for the other shareholders. Also, I wonder if paying out an increased dividend hurts or helps the company with regard to the SEC charges.

    Is there anyone on the board with a longer background in NPK that might have any insight into this?

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    • jrad, betting on a big distribution is an okay idea, but there seems to be no indication of the timing of such a significant event.

      The company also did nothing to improve itself through big years as well as lean years. It took tremendous market pressure to give up US manufacturing and wake up to the cost benefits of off-shore sources.

      But in two important ways you might be on to something. The company no longer needs the big cash pile for working capital purposes and it's got to be time for some serious estate planning. The Cohen's hold about 30% of the common, which suggests to me that 70% of whatever is paid out goes to outside shareholders. That probably does not appeal to their sense of keeping a tight hold on the cash. But who knows?

      • 2 Replies to no_slapps
      • no slapps: I am willing to bet some money on the Pizzazz. Accordingly, I just placed an order to buy NPK at $34.85. I was counting on you and your poison pen to drive the price down further, but I am running out of time. Perhaps the other NPK investors have developed an immunity to your venom. It's a good till cancelled order so I am making one last request for you to fire up that poison keyboard and get my order filled.

        My reasoning is that NPK might pay a $2.00 dividend in 2004 and at a cost of $34.85 my yield on an annual basis approaches 6%. I just learned that my Washington Mutual platinum account reduced its floating yield from 1.62% to 1.47% which makes an almost certain 3% from NPK look pretty good and a potential 6% look very desirable. Let the criticism and insults fly!

      • I know it's a long shot, but I don't have a lot of money invested in NPK. I found several smaller companies earlier this year that (1) were sitting on a pile of cash and (2) were controlled by a family with older members. I hoped they would take advantage of the 15% tax rate and pay a special/larger dividend, even if it meant that they had to pay some of it to the outside shareholders. Sometimes it's worked, sometimes it hasn't, but it keeps me busy. Sort of a play on Mario Gabelli's search for companies with management close to death.

        Thanks for answering. It doesn't look like the Cohens have much of a track record for making use of the cash that NPK has, so they might as well pay some out. I think they ususally announce the dividend in February, so we have some time to wait.

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