optionsXpress (Nasdaq: OXPS ) announced two weeks ago it will be paying a $4.50-per-share dividend on Dec. 27. After reaching a high of $21, the stock fell more than 10% in early trading yesterday after confusion over its ex-dividend date. That's the date when a stock begins trading without the right to the dividend.
Normally, the ex-dividend date is two days before the record date. Since the dividend is so large, special rules apply. By Nasdaq's rules, when cash dividends (as opposed to dividends of shares) are 25% or greater, the ex-dividend date is the first business day following the payable date.
This drop in share price gives investors the opportunity to get in just below $20 a share. Around that price you get a one-year yield of more than 22%. That's higher than current leading high yielders American Capital (Nasdaq: AGNC ) and Chimera Investment (NYSE: CIM ) .
Special dividends can be interesting situations. This past September, for instance, shares of Diamond Hill (Nasdaq: DHIL ) jumped more than $11 to $71.75 a share the day it announced a $13 special dividend. Over the next two months as more investors learned of the dividend, the shares rose to $86 a share before the dividend took place.
These dividends are also currently doubly attractive because at this moment, Republicans and Democrats are bickering over extending the Bush tax cuts. A vote is expected later today. Since the dividend is being paid before the end of the year, you are guaranteed the current beneficial tax rate on dividends as long as you hold the stock for 60 days.
optionsXpress isn't the only company to have recently announced paying out a special dividend. Other companies that announced special dividends recently that you can still buy into include:
1. VeriSign (Nasdaq: VRSN ) announced a special dividend of $3 per share (shares trade at $35.74 as I write for a one-time dividend yield of 8.4%), to be paid on Dec. 28 to shareholders of record at the close of business on Dec. 20.
2. Freeport-McMoRan (NYSE: FCX ) announced a special dividend of $1 per share (shares trade at $113.65 as I write this, which puts the yield at 0.9%) to be paid on Dec. 30 to shareholders of record as of Dec. 20. In October, the company also announced it had increased its annual common stock dividend from $1.20 to $2.00 per share for 2011.
3. PACCAR (Nasdaq: PCAR ) announced a special dividend of $0.30 per share (shares trade at $57.20 as I write this, which puts the yield at 0.5%) payable on Dec. 29 to stockholders of record on Dec. 17. In September, the company increased its quarterly dividend from $0.09 to $0.12 a share.
While none of these are recommendations, they are a good place to look. Companies paying special dividends believe they will do well in the future, and by collecting the special dividend you have the opportunity to reinvest in the business at a lower price or keep the cash to invest when bad times come around.
To see a broader list of companies paying out strong dividends, click here to get The Motley Fool's five-page free report, 13 High-Yielding Stocks to Buy Today.
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