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  • wareham2620 wareham2620 Aug 24, 2011 10:13 AM Flag

    Dividend after 1:3 split

    What does the reverse stock split mean for the dividend?
    It would work in much the same way as for the number of shares of stock. After a 1:3 reverse stock split, you would own one-third as many shares, but we expect the quarterly dividend per share would triple. This assumes Duke’s board maintains the dividend at its current level and adjusts it for the reverse stock split. In that case, the monetary value of your total dividend would not change.

    For example

    The table below provides an illustrative example of the effect of a 1:3 reverse stock split, based on the assumptions described above.

    Illustrative Example Number
    of shares owned Price
    per share Quarterly dividend
    earned per share Total value
    of your holdings
    Before a reverse stock split 300 $18 24.5 cents $5,400 value of shares
    $73.50 quarterly dividend
    Immediately after a reverse stock split 100 $54 73.5 cents $5,400 value of shares
    $73.50 quarterly dividend

    Notes:

    •The reverse stock split would become effective if, and at the time, the merger is completed, at a ratio of 1:3, to be determined by Duke’s board of directors after consultation with Progress Energy.
    •The example presented in the table assumes for the reasons we have described that the reverse stock split does not change the company’s total market valuation and that Duke’s board of directors adjusts Duke’s current quarterly dividend

    http://www.duke-energy.com/progress-energy-merger/faqs.asp

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    • Awesome post- thanks. So it looks like they'll only pay 24.5 cents/shr/qtr if i'm reading this right. Sounds like a BAD deal - they now pay 25 cents /shr and we'll lose 2/3 of our shares. PLEASE correct me if i'm looking at this the wrong way. THX


      "The combination supports our objectives of growing the regulated business and providing consistent and predictable earnings and cash flows to continue to support our dividend payments and maintain our balance sheet strength. The combination is expected to be immediately accretive to earnings per share in the first year after closing and the combined company expects to pay a quarterly cash dividend of 24.5 cents per common share, which represents a 3 percent dividend increase for Progress shareholders, after adjusting for the exchange ratio."

    • And wareham2620>>>>>>I believe you are straight from the Duke Energy boiler room!! At least you are a respectful pumper with solid info. I just don't like the info.

    • I am not even satisfied with the best case scenario of one maintaining the same amount invested and the dividend staying the same. And the dividend staying the same is not a given!! I'll be selling all my IRA DUK here within an hour or two and be putting my money where my mouth is. Today is a good day to sell. Today is a gift.

 
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