From Grant Wasylik, chief analyst, The Palm Beach Letter: On February 26, The Palm Beach Letter’s real estate authority company raised its quarterly dividend by 3 cents, or 13.6%. The new 25-cent quarterly dividend is payable on March 26.
We originally recommended the pick as one of our Special Dividend stocks. Last year, we received 88 cents in regular dividends and a $1 special dividend—its fifth consecutive year paying special dividends.
[Special dividends are dividend payouts a company issues above and beyond its regular quarterly schedule. The dividends are not included in dividend yield calculations on financial websites like Yahoo! Finance. That means companies that pay these “stealth dividends” are hidden to most investors’ eyes.]
Its 2014 year-end yield was 4.5%. About 45% of that total yield was stated (regular dividends), while the other 55% was hidden (special dividend).
Here’s what Tom and Grant wrote about the company’s “stealth yield” back in February 2014…
I want you to note the dividend (20 cents) and the projected annual yield (2.27%).
That’s not telling you the full story.
That’s because not only does this company faithfully pay regular dividends every quarter, it has a solid history of special dividends, too. That’s why it made our list in the first place.
In the nine calendar years since going public, it has declared special dividends for six of those years.
More recently, it has issued special dividends in the last four consecutive years. That’s 2010, 2011, 2012, and 2013. Annual special dividend yields were 7.7%, 3.5%, 4.9%, and 2.5%, respectively.
If we combine the company’s regular and special dividends, we get true yields of 9.2%, 5.5%, 7.3%, and 4.5%. That’s an average of 6.6%. That means the financial media are showing you only about 35% of the company’s real yield.
Since our February 2014 recommendation, we’re up 28% on this outstanding business (including all dividends). And, if you want to own this dividend stalwart… it’s still buyable—barely. It’s about $1 under its “buy-up-to” limit.
Current Palm Beach Letter subscribers can click here to read the February 2014 issue.