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Sturm, Ruger shares rise on special dividend

NEW YORK (AP) -- Shares of Sturm, Ruger & Co. rose Tuesday after the gun maker declared a special dividend of $4.50.

THE SPARK: The Southport, Conn.-based company said late Monday that its board voted to declare the special common stock dividend, which will be paid on Dec. 21 to shareholders of record as of Dec. 7.

THE BIG PICTURE: CEO Michael Fifer said that the decision to pay the dividend was based on an analysis showing that the company can continue to fund its own growth and its regular quarterly dividend, while still growing its cash reserves.

THE ANALYSIS: "This dividend answers the looming question of what management would do with its substantial cash reserves from the company's strong operating performance," said Benchmark Research analyst Mike Greene in a note to clients. Just as importantly, he noted that management's comments indicated it continues to expect high growth in the coming year.

Greene kept a "Buy" rating on the stock with a $60 price target.

THE SHARES: Up $2.71, or 5.6 percent, to close at $51.54, after peaking at $52.56 earlier in the session. Over the past 52 weeks, the company's shares have traded between $29.11 and $58.42.