rule of thumb: if you like the growth prospects for the stock and you don't like paying
taxes on dividends, buy the stock AFTER the div payout. You will get more shares at a
cheaper price since the stock will drop by the amount of the dividend. Otherwise you are
stuck with a dividend that you have to pay tax on, a lower market value on the same number
of shares you originally bot and then you have to buy more shares to get back to your
original basis in the stock. It just doesn't make sense to do it that way. Your broker is
the only one who comes out ahead. I will not be surprised to see more companies paying out
special dividends since it is a way for CEOs to bonus themselves instead of using stock
options, which have come under scrutiny by the SEC. And, corps now have to expense stocks
options under GAAP, e.g. drain on EPS. Special divs make it look like the co. is rewarding
shareholders (I guess).

That's a good idea to call your broker and see what they say. I didn't think of that.

Cohen,
I really don't know enough about this type of distribution to be able to say what the deal
is. If you've done this before I would say you are the expert, not me. I may call
Ameritrade tomorrow and ask just to see what they say. Seems like the company would
require you own their stock at the time of distribution but like I said.....I could be
wrong about that. Just hope the stock continues to climb after the distribution.
Thanks for responding!

Of all the dividends that I've received, its always buy before the ex-dividend date and if
you want to, you can sell it after the shareholders of record date and still get the
dividend.

I really am not sure of what the exact deal is with distributions like this but I remember
a few years ago a friend was going to buy a stock for its special dividend and asked his
broker if he could buy it before the cutoff date to be a shareholder of record and sell
before the actual distribution and he was told he had to OWN the stock at the time of the
distribution in order to get dividend. I understand the deal to be that you have to be
a shareholder before close of business April 5th and own the stock until April 19 (date of
dividend) but I could be wrong. Just to make sure I am going to hold the stock until
April 20th or later.

If that's the case then you would have had to buy before april 3rd and you could sell it
after april 5 and get the dividend.

Last edited on: 04-04-2007 03:50 pm

This is the latest announcement regarding the dividend that was posted yesterday on
Finance.yahoo.com

Ligand Pharmaceuticals Incorporated (the "Company") has been informed today by NASDAQ that
the ex-dividend date with respect to its $2.50 per share special dividend will be April 3,
2007. The special dividend is payable on April 19, 2007 to shareholders of record of the
Company's common stock on April 5, 2007.

I thought the share value of the stock would not go down until the day of the payout but
yesterday the share value went down $2.50 so the share value you see today is the correct
share value and will not go down any further. If you buy before the deadline of April
5th then you will get $2.50 cash for each share you own. Unfortunately I bought some
before yesterday so my profit from the dividend will not be as much but for the shares I
bought yesterday, at the low price, they will realize the full $2.50 dividend. You
will have to hold the stock until April 19th payout from what I understand. Does anyone
know if this is correct?

Last edited on: 04-04-2007 11:38 am

Just to clear up that first sentence, your cost base would still be 10,000 but your
brokerage would be showing a market value of 7,500.

I agree with you tnt. I have no idea about this company and was addressing it strictly
from the dividend aside because it seemed that's what the questions were about.
Definetely, do your research on it, as with every stock.