special dividend 28c + cap return 10c, page-65

Happy to explain the Telstra reference Twinwins.

There are a group of traders who earn their income by dividend harvesting. Usually they trade via their Slef Managed Super Funds. Telstra has been one of the perennial dividend harvesting stocks. In recent years it has been paying two fully franked dividends a year of 14c each. TLS board has said TLS will pay these for the 2012 and 2013 financial years. That is a 28c full franked dividend or 40c grossed up dividend/year. There is also the chance of a capitla reutn to Telstra shareholders early next year (though details not finalised yet). TLS is trading around $3.12 meaning a fully franked dividend yiled of 12.8%

Then along comes Exco and declares the same size fully franked dividend (28c/share or 40c grossed up) and a capital return which is definite (after shareholders vote) of 10c/share. All this on a share trading at 70c. Grossed up dividend yield is 57%. When the capital return is inclu8ded the grossed up dividend yield a + capital return is 71.4%.

Dividend harvestors would be well of the similarity in dividend amount, likely captital return and also that a decent run-up in shareprice to ex dividend date is likely (in both stocks).