Why Safeway’s Shares Blew Up and Eventually Popped

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 grocer Safeway (NYSE: SWY  ) jumped as much as 11% today, after moving up its quarterly dividend.

So what: Management said it would pay its normal $0.175 per share dividend on December 31 instead of next year. This saves investors from higher dividend taxes that will take hold next year.

Now what: This is just another ridiculous reaction to a dividend, and the sell-off during the day shows that not all investors are crazy in chasing after dividends. Even near the end of trading, the stock is up $0.44, more than the entire dividend! This isn't a reason to buy the stock today, and I would actually wait for it to fall back to earth after this dividend craze is over if you've been looking at adding shares.

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