The one-year chart below demonstrates COP's share price movement after it spun off Phillips 66 (PSX) compared to its dividend payout ratio. Currently it's at a modest 33% of earnings.
COP data by YCharts
If you're looking for the next Costco-style special dividend, look for companies with lots of cash on its balance sheet. Also look for a company that has received well-deserved criticism for hoarding cash instead of being extra generous with its shareholders.
One such company that comes to mind is Microsoft (MSFT) which fits that description to a "T". This would be an auspicious time for MSFT to offer a special dividend payout, having just had its one-year price target lowered by Jefferies to $31.
As of September 30 MSFT was sitting on a boatload of cash. Its total cash is over $66 billion and their levered free cash flow is a mighty $24.45 billion. If MSFT doesn't think it should give shareholders a special, end-of-the year dividend windfall, all I can say is "give me a break." If any company should pay out a bonus dividend, Microsoft should be the poster-child.At the time of publication, the author was long AAPL, COP and MSFT. Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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