Peculiar_Investor wrote:This one is special, George Weston Limited Announces $1 Billion Special DividendGeorge Weston wrote: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.
"The Corporation's track record of solid operating performance, combined with significant cash balances and ample liquidity to grow the business, provides the Corporation with the opportunity to reward shareholders with a return in excess of our normal dividend," said W. Galen Weston, Chairman and President of the Corporation.
Mr. Weston added: "Capital markets have come through some very turbulent times and the Corporation took a conservative position holding excess cash. Now with increased stability in the capital markets and our strong balance sheet, the directors felt that a return of capital was appropriate. At the same time, we are preserving sufficient financial flexibility to meet the Corporation's ongoing operational and capital requirements and to pursue growth opportunities."
Wow! They think money is better in their shareholders hands rather than their own. Of course, it probably doesn't hurt that the Weston family has a large ownership stake so are paying themselves. Perhaps the Shaw family could have followed this example?
I highlighted the part above that has me puzzled. Since when does a Total Debt to Equity Ratio of 89.56 constitute a strong balance sheet? Wouldn't it have been better if they'd just increased the annual dividend payments a little bit, and used the rest of the cash to pay down debt? Even the company's current ratio of 1.8 wouldn't of passed Ben Graham's minimum of 2 to 1.