Banking, finance, and taxes
Citi Reverse Split & Dividend: Three-Card Monty (C)
Published:
Last Updated:
Citigroup Inc. (NYSE: C) is announcing something that we are a bit surprised about this morning. It is not quite a shell game, but it is a strategy that rarely works well for investors. The recovering money-center bank has announced a 1-for-10 reverse stock split that will take effect after the close on May 6, 2011. The company then also plans to reinstate a quarterly dividend of $0.01 per share in the second quarter after its split.
Reverse splits can work sometimes. Most investors and traders now do not generally view a reverse split other than anything as a game of three-card monty.
The company said that no fractional shares will be issued in connection with the reverse stock split as the transfer agent will aggregate all fractional shares as a result of the reverse stock split and those shares will be sold into the market.
If Friday’s $4.50 close holds, then shares would adjust to $45.00. Unfortunately, a $0.01 per quarter or $0.04 per year dividend is going to generate such a small yield that investors will never even know they received a dividend. The company is merely sending out a message that it can begin to pay back something to holders and that it will continue to look to pay holders more as conditions continue to normalize ahead.
Citi shares are with a positive market in the pre-market trading. Shares are up 2.4% at $4.61 in early indications.
JON C. OGG
The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
