RGR pays a variable dividend of 40% of EPS. The company reported earnings after the close yesterday and got slaughtered because revenue dropped off a cliff.
For the TTM the total dividend paid out was $2.26 / share.
If Q3 numbers were identical for the next 3 quarters there would be a total dividend paid out of $0.56 / share over the next year, all because of the variable dividend.
This is from the Q3 transcript:
I've found myself agreeing in the past that it does make sense to pay out a static percentage for the dividend. If earnings drop the company won't be financially stressed to meet its dividend "obligation" if the dollar amount was static rather than the % of EPS.
Thoughts?
For the TTM the total dividend paid out was $2.26 / share.
If Q3 numbers were identical for the next 3 quarters there would be a total dividend paid out of $0.56 / share over the next year, all because of the variable dividend.
This is from the Q3 transcript:
Quote:Andrea James - Dougherty & Company LLC, Research Division
No, it's very helpful. Just one more. Do you expect to change your dividend strategy? It is sort of rare isn't it to do a variable dividend? And I'm just wondering if you just anticipate kind of just going that road for the near future?
Michael O. Fifer - Chief Executive Officer and Director
No, I don't anticipate changing it. And I'm frankly surprised that more -- big companies haven't adopted it. Because it sure makes a lot of sense. Let's go back to when we started the dividend, back in the first quarter of '09 and I think at the time, we figured the dividend we could pay, reasonably after forecasting our cash flows and needs was about $0.06 a share. And had we done that and acted like most companies no matter how good our results grew, we would have maybe raised it $0.01 a share per year or every other year. And so, maybe it would be a whopping $0.10 a share by now or $0.12 a share. Well, that dividend has gone up pretty high per quarter, even last quarter, which was a very disappointing quarter, second quarter was about $0.45 a share. And this quarter, it's $0.14 a share. So it's still quite a bit more than had we started at $0.06 and done it the old fashion way. And of course, over the years, there have been some spectacular quarters up in that $0.50-plus per share. And since '09, we've dividended out $10.45 per share, and it probably would only been a couple of bucks or less, if we'd started at $0.06. So I think it's a really great program and more companies owe it to their shareholders to adopt it.
I've found myself agreeing in the past that it does make sense to pay out a static percentage for the dividend. If earnings drop the company won't be financially stressed to meet its dividend "obligation" if the dollar amount was static rather than the % of EPS.
Thoughts?