If so, here's an incentive -- you have until Tuesday to buy shares and get on management's list for a dividend check.
Playing "Dividend Capture" can be a lucrative strategy, if you time it just right so you can buy, get the dividend check and sell. Brocade will pay its dividend on April 4 to shareholders of record on March 10.
There are reasons you might want to play this strategy and reasons for buying the stock, which is currently around $10.30, and let the annual 4.5-cent-a-share dividend, yielding 1.80%, pay you to hang on. The stock is up 12% for the year to date.
Revenue has been hard to come by for San Jose, Calif.-based Brocade. But the company's prospects have taken a recent turn for the better. Brocade beat analyst estimates for both revenue and earnings in its fiscal first quarter report last month. Its business outlook was in line with analyst expectations and suggested more growth ahead.
During the quarter Brocade's gross margin rose 90 basis points from the prior quarter and 40 basis points from the year-ago quarter. Brocade spent $144.5 million buying back its stock and ended the quarter with a solid cash-to-debt ratio ($1.39 billion in cash and $798 million in debt), meaning there's more than enough cash left on the balance sheet to fuel more buybacks despite operating expenses climbing 7% during the quarter.
So Brocade operates with minimal constraints. Not only does the company have pricing leverage to grow its margins, it generates more than enough cash flow to please investors with buybacks while still spending to grow the business.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.