A select group of stocks might be primed to offer investors an appealing combination of unexpected income and price appreciation, according to Morgan Stanley.
Special dividends — one-time payments companies make to shareholders outside of their regular dividend cycle — tend to result in higher share prices, according to Todd Castagno, a strategist at Morgan Stanley.
Indeed, companies that have distributed these special dividends have seen their share price beat the market by 4.1% in the six months following the announcement, Morgan Stanley found.
That outperformance grows to 7.8% in the 12 months after the special dividend news.
To that effect, Castagno's team highlighted a group of "special dividend hopefuls" — companies that seem to have the ability to offer these one-time payments.
Persons:
Morgan Stanley, Todd Castagno, Castagno, Morgan, Brian Nowak, Paychex, Kalei
Organizations:
Six Flags, Cedar Fair, Google, Wall, Bank of America
Locations:
Wall, EOG