Gluskin Sheff and Associates (GS) is a wealth management firm that primarily deals with wealthy clients and business’ making most of their revenue from management fees. We bought shares in August 2017 and for most of the time we owned the company, the share price was below what we paid. We were and still are comfortable with waiting for the share price to come back up, especially considering the 6.5% dividend payout.
The week of May 14, 2018, GS announced that along with the regular dividend of .25 cents a share on June 4, 2018, a special dividend of .60 cents a share would also be paid to shareholders who owned stock in GS by May 25, 2018. The week of May 14-21, 2018, GS share price increased 11 percent. GS share price has increased 21 percent since April 23, 2018. If you study GS and it’s dividend payouts, you’ll be quick to realize that since 2005, GS has paid out 16 special dividends, equaling more than one per year. I studied the trend with GS after the last few special dividends and I have seen the stock get bid up and come back down, double digits, after the special dividend.
I am going to sell my shares of GS right after the dividend and special dividend, before re-buying them later in June or July when the share price drops 10%. I do not have a crystal ball and I cant say with certainty if I am going to be right but the markets are cyclical and I think that some investors will take the money (special dividend) and run. My down side risk is not that great as I will be selling about 7% up from where I bought and I am ok with exploring other avenues if GS share price does not drop as expected.
Only time will tell…
For my portfolio, I have maxed out my TFSA and won’t have any contribution room left until Jan 1, 2019. When I sell GS I will buy it back (when it drops) in another portfolio, this way I will have cash on hand in my TFSA to add to my existing companies!