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Daktronics Inc. Message Board

  • hobbyfarmer2 hobbyfarmer2 Nov 20, 2012 10:32 AM Flag

    Special Dividend?

    Earlier this year Dakt indicated that they would be having a semi-annual dividend starting this year. Does anyone know what happened to that plan? In light of the impending tax increase to dividends next year and DAKT's rather strong cash position I wonder if a special dividend may be a possibility before the end of the year? I sure appreciated the special dividend of the last two years.

    Sentiment: Strong Buy

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    • Thanks DAKT and Merry Christmas to you too. Congrats to jhu663 for a great call on the special dividend and regular dividend. I too was expecting a 50 cent special dividend and DAKT did not let us down. I plan to use part of the dividend to make our Christmas more special and will certainly be adding to my share count again early next year with the remainder and some extra funds.

      I expect that DAKT will see a good year in 2013 and in the years to come. DAKT is part of my buy and hold forever stocks.
      Merry Christmas All :)

      Sentiment: Buy

      • 1 Reply to hobbyfarmer2
      • I don't think it was that prescient given that this has been their M.O. over the past 2 years. As long as DAKT continues to focus on margin improvement coupled with sales growth like they have done so far this year as opposed to just sales growth which is what happened the year before they should be on a path toward 15 given they will likely be able to generate close to $1 of FCF. While I like the company I love the volatility that it displays which allows you to buy cheap and sell when it goes on a run all while maintaining a core position along the way. I have been in and out over the past 2 and half years and it has a been pretty profitable over that time especially when the dividends are taken into account.

    • Last year they announced their new semi-annual div program at the beginning of December and they also announced the special div at the same time. I would expect that the regular div announcement will be in that same time frame, so probably in the next couple of weeks. given that cash and securities are now at about $1.90 a share, I think it is highly likely that they do another 40-50 cent special dividend. Usually when their cash balance gets this high they do a special dividend. Also, they guided to only 13mm in capex for the year, which means about another 8-9mm over the next 2 quarters, which means they have way more cash than they need at the moment.

      • 2 Replies to jhu663
      • You may remember that I misremembered that there had been a special dividend in 2010. Now there have been specials in each of the last 3 years of $.50, $.40 and now $.50. At the current price of a DAKT share, that makes this company the one in my portfolio which has paid the highest annual return on current cost. At each announcement, the news release gave the current cash position as justification for the special. So it might be prudent to watch that cash position as you apparently have to determine whether a special will be announced each year.

        DAKT is an exceptionally good investment in the respect of it's return on the stock price right now if one assumes they will receive $.60 to $.80 return on a $9 or $10 dollar investment. Of course, the reason they do it as a special is to avoid promising more than they can deliver in bad years, so I ought to reduce the 7% or so return by the probability that a special will not always be offered. But I regret not buying more shares when the price was down below $7 during the past year making total return more than 10% on the dividend alone.

        And that suggests that I might value DAKT stock higher than I have been based upon it's probable dividend. I do guess that an acquisition or major capital project would preclude the continuation of the specials, but apparently they don't expect to do those things next year. Thus I think it would be prudent for me to buy more DAKT at today's price of $10. Come to think of it, the of record date is December 10, so presumably someone who was paying better attention might have purchased for $10 Wed or Thurs and received a $.615 dividend on December 20. Can I still slip under the wire on Monday or did it trade exdividend already? I don't pay enough attention to those mechanics to know for sure, but suspect that date has passed.

        The important point is that you have identified an excellent valuation point for people who pay close attention to the company. Thank you.

      • very prescient! both in terms of timing and amount....bravo

 
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