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Weyerhaeuser Co. Message Board

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  • reallynolie reallynolie Jul 12, 2010 1:07 PM Flag

    I have a dumb question:

    I'm like you, I don't get it. Where does the money go? Don't they just give it to themselves to buy the new shares? Don't they wind up with most of the money right back and double their shares?

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    • I think the sequence of event goes like this:
      Let's say you have 1000 shares and the pps is $40.00 on Sept.1st.
      1. WY extracts $26.00 a share from their cash position to pay div.
      2. The pps drops to $14.00
      2. You receive 90% of the $26,000.00 in new shares = 1671 new shares
      3. If you value your new holdings on Sept. 1st: you now have the initial 1000 shares + the new 1671 + the cash $2,600 = $37,394.oo in stocks and $2.600.00 in cash = $ $39,994.00 or the same as before the whole thing started.
      The only difference is that you now own Uncle Sam and your state taxes on $26,000.00 dividends payment. So it's not that you lost money.... you just made your tax liability grow.... Some people don't mind giving their money to the government... and some do.
      It all depends... :o)

 
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