Amrep's ( AXR) strong land sales business in New Mexico has fueled a massive special dividend for shareholders, and the stock has been on a tear since the announcement of the payout last week. The New York-based company, which sells residential land in New Mexico and also distributes magazines, said on Dec. 7 that it plans a special dividend of $3.50 a share payable Jan. 9 to shareholders of record at the close of business on Dec. 19. Amrep's shares recently traded Monday at $31.50, up 11%. The stock is up 23% since the dividend announcement. The company, which has a market cap of $206.7 million, operates in three segments: real estate development, magazine distribution and subscription-fulfillment services for publishers. But, in particular, the company cited the real estate division's strong cash flow as a reason for the dividend payout. Amrep's real estate division is almost entirely focused on Rio Rancho, N.M., near Albuquerque, where the firm owns 19,550 acres of land it is developing into residential lots and commercial sites to sell to homebuilders. For its fiscal year ended April 31, the company's revenue from land sales increased 29% to $36.1 million from a year earlier, whereas revenue from the magazine division slumped. The company's total revenue for the period was $130.9 million. Amrep's income from continuing operations increased to $15.6 million, or $2.63 a share, from $11.3 million, or $1.71 a share, in fiscal 2004, primarily as a result of the increased revenue and higher gross margins on land sales in the real estate division. As a result, for the quarter ended July 31, the company had $43 million in cash on its balance sheet. Amrep already paid a special dividend of 55 cents after its fiscal 2005 period ended. In the past two fiscal years, the company also paid special dividends of 40 cents and 25 cents.