I have owned shares of WDC for a few years, off and on, now on. I have also owned RGR for a few years, off and on, now on. RGR just announced a special dividend of $4.50 per share, which amounts to a large portion of their cash. I guess there are a few other companies that are paying out special dividends to help shareholders avoid what will almost certainly be some hike in the taxes paid on them. With the cash that WDC holds, they could easily pay out 50% of it and still be in a great cash position. This would amount to an approximate $7.00 dividend, right? They'd still have 20% of their market cap value in cash after doing so, which seems more than enough to keep with their R&D budget, and be able to finance most acquisitions. Here's to hoping. They certainly could do it quite easily.
Agreed. STX has a 13% payout ratio. WDC a paltry 3%. They could easily afford a more generous return to shareholders. If they announced either special dividend or an increased, more generous rate, it would also get the shorts running to cover. Granted, WDC doesn't have the short ratio that RGR does/did. Look at how RGR has performed after they announced the special divvy. It was around $49 per share. It's now trading at around $57. That's in a matter of a couple of weeks, and while there's been a general swoon in the broad market. It's an interesting way to mess with short-sellers, and there's no time like the present. Good luck, longs.
Thanks. The reduced amount of cash, net of taxes, would make a special dividend less likely. Lots of boardrooms out there are considering it though. The prospective increase in taxes on capital gains and dividends means a lot to guys that have tens of thousands of shares, which I don't. Good luck, longs.