3SOF

Dominos Pizza is offering a one-time dividend payment of $13.50 per share. What are your thoughts on this?

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070417:MTFH66733_2007-04-17_20-45-13_N17452767&type=comktNews&rpc=44

Also, I'm pretty sure that you can purchase this stock up unti the ex-dividend date of May 4th and as long as one holds it until after the market opens on May 7th, they'll qualify for the dividend.  Can anyone shed some light on this?

PR from the company http://phx.corporate-ir.net/phoenix.zhtml?c=135383&p=irol-newsArticle&ID=986204&highlight=

Looks like you need to purchase the stock before the market closes on 04/27/2007, and hold them until 05/07/2004.

"The Domino's Pizza Board of Directors approved a $13.50 dividend, payable on May 4, 2007 to shareholders of record at the close of business on April 27, 2007, with an ex-dividend date of May 7, 2007. Shareholders who sell their shares prior to the May 7, 2007 ex-dividend date will also be selling their right to receive the special dividend. Domino's Pizza common stock will start trading on an ex-dividend basis beginning May 7, 2007, in accordance with NYSE rules."

There are special rules for very large special didvidends. According to what the company is saying, you would have to purchase the stock on or before 4-24 to be a shareholder of record on 4-27 (T+3), however if you sell before ex-divi (5-7), you would be selling the rights to that dividend to anyone who purchases before 5-7, regardless that the payment date is 5-4. Any purchaser buying after 4-24, could see a bit longer for the divi to be posted to their account.

Ex-divi means without dividend. Before ex divi date, you are either selling or buying the rights to that dividend, along with the stock.

Could possibly create a buying opportunity on 5-4 (payable date) if there are alot of confused sellers thinking they get to keep the divi.

Really the ONLY relevent date is the ex-divi date. This is the first day that the stock will trade without divi attached.  Buy before 5-7, you Will receive the divi, if the date stated by the company is correct.

Keep in mind that the vast majority of the divi will be return of capital possibly tax benefitting LT shareholders, present or future, not ST term holders. Even the small part declared ordinary will not tax benefit ST holders unless you hold for 31 days-any combination of days before or after ex., as long as you have at least 1 day before ex- where it would become a qualified divi for tax purposes.

Expect the stock to open 13.50 less on ex-divi date. Where it goes from there?

Would probably be nice to get it at 32.40 and hold for the dividend pay out.
Just speculating.

Everything else equal, I would never buy a stock because of a dividend, basically because of what you said BigSully1, if the dividend value is $13.5, the stock will probably open down $13.5 on the ex-dividend date. The company itself says it:

«The price of Domino's common stock is expected by management to decrease in relation to the amount of the special dividend on the ex-dividend date May 7, 2007 as is typical when public companies pay significant special cash dividends.»

What seems to be happening is they're taking debt to pay debt, the special dividend and a $200 M stock buyback program. That debt, of course, has interest and that will reduce the company's net profit margin going forward.

I dislike the situation, can be wrong though, good luck.

I tend to agree with David.

I don't like that big dark cloud hanging overhead and the MACD seems to be trending down.
Probably in at 32.40 and out quickly on the overhead uptrend/horizontal resistance at around 33.99.