Meet the latest ASX title to declare a special dividend


If it's something that won't go out of style at any time, it's a special dividend – and Jumbo Interactive Ltd (ASX: JIN) is the last to reward shareholders with this special tribute.

The online lottery company said it would pay a fully-paid special dividend of 8 cents per share and the stock price of Jumbo Interactive defied the collapse of the S & P / ASX 200 (Index: ^ AXJO) (ASX: XJO) index to trade higher, even if it subsequently lost ground.

Nevertheless, it is still holding up better than the market as the price of JIN shares fell 0.3% to $ 16 compared to the 0.5% drop in the ASX 200 in post-lunch trade.

Not a big surprise

But Jumbo Interactive's special dividend was not a big surprise and this could explain why it didn't enjoy a stronger rebound. The company had paid a special dividend in the last two consecutive years and the shareholders could smell another in the air, given the company's solid balance sheet.

The management said it will have about $ 11 million in undistributed profits and $ 10 million in postage credits after paying the special dividend – leaving Jumbo Interactive with enough firepower to undertake other capital management programs in the not-too-distant future far.

"The liquidity reserves available following this special dividend will be in the region of $ 53 million for potential acquisitions, expansion opportunities and / or a further special dividend in the future," the company said in a statement.

The biggest dividend jackpot

In addition, shareholders can expect an increase in the final dividend even when Jumbo Interactive reports the full year results in August. Management is driving a net profit of $ 24.2 million for fiscal year 19, and if the dividend policy of paying 85% of net income is unchanged, this would imply a final dividend of about 18 cents per share.

The company doubled its interim dividend of 15 cents in February of this year, which means that shareholders will be able to raise 41 cents in total for fiscal year 19. This puts the yield around 3.6% if franking credits are included.

It is not enough to attract investors on income, although some may be happy to buy and take into account Jumbo Interactive's great dividend growth in recent years.

The "special dividend" club

Jumbo Interactive paid a final dividend of 11 cents per share in 2019 and joins a long list of ASX companies in the "special dividend club".

Companies that have recently declared a fully paid special dividend include a large miner BHP Group Ltd (ASX: BHP), banking and insurance group Suncorp Group Ltd (ASX: SUN), logistics company Qube Holdings Ltd (ASX: QUB) and conglomerate Wesfarmers Ltd (ASX: WES), just to name a few.

The company's boards of directors have been put under pressure to distribute franking credits to shareholders, while speculation claims that the federal Labor opposition will win the government later this month and will change the rules to prevent cash reimbursement for l & # 39; postage.

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Brendon Lau owns shares in BHP Billiton Limited. Motley Fool Holdings Inc., the country's parent company, Motley Fool Holdings holds shares in Jumbo Interactive Limited. Motley Fool Australia owns shares and recommended Wesfarmers Limited. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.

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