A Very Merry George Weston Christmas

George Weston (WN)Hi George, just to let you know that your shareholders were very pleased to receive your most generous surprise dividend announcement yesterday, so thanks for the early Christmas gift. Really $1 Billion is a big gift!

“TORONTO, Dec. 15 /CNW/ – George Weston Limited (“Weston”) (TSX: WN) announced today that it will pay a special one-time common share dividend of $1 billion, representing $7.74751 per common share, on January 25, 2011 to all common shareholders of record at the close of business on January 18, 2011.”

On Dec. 15th George Weston (WN) closed at $79.38 per share, so this special dividend is a 9.76% return on equity. For anyone who purchased WN before the ex-dividend on the 13th, you would have also received the regular dividend for an additional 0.36 cents per share.

Unfortunately I was not one of those investors holding George Weston (WN) as it was trading very close to its 52 week highs.  And most unfortunately I did not have enough cash in my TFSA or RRSP when the announcement came out on the 15th, as the stock was trading below $80. I would have loved to have been on this first thing in the morning with a limit order for $80. However I was able to get some funds transferred and that was enough to get me in the door with 10 shares @ $83. I think the stock will increase even more before the January 18th dividend date. Time will tell, but I think this will be a nice short term play, and a sweet $77.47 dividend for my 15 minute effort.

All you have to do is purchase George Weston (WN) before Jan 18th record date (by the 12th to be sure) to get in on this sweet deal. But be forewarned, WN is trading at its 52 week highs, and the stock market is anything but predictable. So there is always the possibility you may lose on the share price. If you are going in big, then keep a stop loss (maybe around $75 to $79).

The lesson I learned this week, it’s always good to be holding a whack of cash in your brokerage account, just in case an opportunity like this presents itself. So for the future the Dividend Ninja will keep a minimum of 5% cash in each of his RRSP and TFSA accounts!

Update

The dates for the George Weston special dividend (according to the Globe and Mail website) are as follows:

Jan. 14th ~ Ex-Dividend Date (purchase by the 13th)
Jan. 18th ~ Record Date
Jan. 25th ~ Payment Date

update  ~ Jan. 20th

This morning I reached my loss point, and sold at $71. Had I sold first thing on the ex-dividend on the 14th around $80, I would have made a nice return. So with the special dividend of $7.75 per share and loss in share price I am down over 7.5%. But the $62 loss is minimal and a good lesson.

10 Responses to “A Very Merry George Weston Christmas”

  1. The Dividend Ninja

    Dec 24. 2010

    SC Writes:
    What is your opinion on purchasing 100 shares of GW to cash in on the special dividend. IE: is it a wise move to expost approx $8400 for a $775 gain? Awaiting your response. Thanks for thinking abt this one.

    @SC
    I think its an excellent move, since you will make a 9% return on your investment (assuming the share price stays above $79). If the share price goes up and continues to do so, then you make even more!

    Since you can buy 100 shares, I strongly suggest you place a stop-loss on this stock (maybe at $79 or so), in case there is a sell-off after the special dividend, or the stock goes down – remember its trading at its 52 week highs. Otherwise you may lose all you worked for!

    Also consider “Position Sizing”. If 8K is 50% of your portfolio, then no its not a prudent move. If its only 10% of your portfolio, then you have the room to play. Position Sizing also determines risk 🙂

    Cheers and Merry X-Mas!

    Reply to this comment
  2. SC

    Dec 24. 2010

    Dividend Ninja…thank you for responding to my Q abt WN. Keeping your response in mind, i will watch the price of this stock until a few days before the ex div date. I sure need to make some money!! Merry Xmas and N year to you too.

    Reply to this comment
  3. The Dividend Ninja

    Dec 24. 2010

    @SC
    Remember to put a stop-loss on WN before the Dividend Payout 🙂 You don’t want to lose money if the stock crashes after the dividend. If the stock goes up then you can raise the stop price.

    Reply to this comment
  4. MA

    Jan 23. 2011

    Ninja, lets revisit this decision now that the share price has dropped to 70.50. As a shareholder before the special dividend, there was no way I was going to pick up some leading into the date. I think it is a great buying opportunity now.

    Reply to this comment
  5. MA

    Jan 23. 2011

    Just saw your update… sorry about that.

    Reply to this comment
  6. The Dividend Ninja

    Jan 23. 2011

    @MA
    Hi there, thanks for posting! I completely agree with your assesment, as a shareholder before the special dividend this is a nice bonus for you 🙂

    I don’t know where the bottom is on George Weston, but at some point yes it will be a good buy – though the fundamentals such as PE etc. should be re-examined. No worries, it’s a very small position I traded.

    Reply to this comment
  7. MA

    Mar 21. 2011

    I have continued to hold WN. Last week my stop loss of %10 was triggered… but guess what? It didn’t get filled for over 30 mins! I had the opportunity to watch it that day and was stunned. I called TD and they said that they had placed the order and the brokers hadn’t filled it yet?!? I was under the assumption that all trades on the TSX are all computer automated at this point. I saw the value of WN drop while of the phone with TD and then start to rebound. In frustration, I canceled the order to sell at my stop and the day ended above where my stop loss was to be triggered. It has been climbing since (now validating my snap decision; I am not happy about).

    I have lost a lot of faith in the ability of the brokers to fill stop loss orders on the TSX. I understand that WN isn’t the most liquid stock, but I couldn’t believe how long it took (and still didn’t get filled after 40 mins). If the market was in a freefall my order would have got filled at the absolute bottom.

    Is there anything I can do to grieve this?

    Reply to this comment
  8. The Dividend Ninja

    Mar 22. 2011

    @MA
    Sorry for my late reply. WN trades aywhere from 60K to 200K+ shares per day, so the fact your stop-loss did not go through is definitely highly unusual. I think you should follow up with TD on that and ask why, becuae with the volume of shares trading it should have.

    Sounds like keeping it was meant to be 😉 Sometimes buy and hold wins the day – and patience in the long term pays off.

    With TD (unlike other brokerages) you can place a limit on your stop loss order, so you have a limit as well as the stop. So for example you can have a stop-loss of $70, but with a limit of $65. That means you will only sell your stock if it falls between $70 to $65, but you won’t sell it below $65.

    http://www.dividendninja.com/stop-loss-and-limit-orders

    Reply to this comment
  9. Had no idea Westons was planning on a special dividend, used to work there and had some shares, eventually I sold them off as I needed the cash, oh well

    Currently I’m looking at the opposite play, PGF (Penngrowth Energy) bought it a while back and at the same time sold my Trans Alta shares (at a small lose) expecting one to rise and the latter to fall. Well….. Mr market had other ideas, TA up $2 and PGF down 75 cents. Goes to show you can’t guess what the market is going to do.

    Anyways I’m giving serious thought to putting in a shit load of money into PGF, I have some money set aside (got priced out of Sunlife and Manulife) and considering it’s hitting it’s 53 week low and a yield of 8% (after a dividend cut) this is a good oportunity to get in cheap

    Hope to blog about it in a few days

    Reply to this comment

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