Why G&K Services Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of G&K Services (Nasdaq: GKSR ) opened 11% higher today after the company said it would be giving more cash back to investors. Shares settled to a 7% gain in later trading.

So what: The company is increasing its regular dividend 50% to $0.195 per share quarterly. The big news was a $6-per-share special dividend, which will be paid April 27 to shareholders of record on April 13.

Now what: This is a huge increase that will cost the company $113 million in total, which will need to be funded, at least partly, through debt. The company is also aggressively buying back shares, so giving back to shareholders is a priority. I'd like to see a little more cash cushion and earnings generation before spending this kind of cash, but investors think it's a good move nonetheless.

Interested in more info on G&K Services? Add it to your watchlist by clicking here.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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