Morgan Stanley predicts that these companies could potentially provide special dividends.

Are you looking for a unique investment opportunity that could provide both unexpected income and potential price appreciation? If so, Morgan Stanley has identified a select group of stocks that may offer just that.

Special dividends, one-time payments made by companies to shareholders outside of their regular dividend schedule, have been shown to result in higher share prices. These nonrecurring dividends can be attributed to various factors such as excess cash distribution or changes in a company’s capital structure.

One recent example is Six Flags, which announced a special dividend of $1.53 per share alongside its merger with Cedar Fair. According to Todd Castagno, a strategist at Morgan Stanley, committing to a consistent ordinary dividend can signal management’s confidence in the business, attracting income-oriented investors, while special dividends serve as a bonus indicating optimism due to various factors like M&A synergies or secular tailwinds.

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In fact, companies that have issued special dividends have outperformed the market by 4.1% in the six months following the announcement, with the outperformance growing to 7.8% in the 12 months after.

Morgan Stanley has identified a group of “special dividend hopefuls” that pay ordinary dividends and have a net cash position above 1% of market cap. Alphabet, the tech giant that recently authorized its first dividend of 20 cents per share and initiated a $70 billion share repurchase, made the list. With its shares up over 30% this year, Alphabet is recognized as a leader in artificial intelligence and has a positive outlook from analysts.

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Paychex, a payroll provider that recently announced a 10% dividend hike, and EOG Resources, an energy stock with a 2.9% dividend yield, are also potential candidates for special dividends according to Morgan Stanley. Both companies have unique characteristics that could make them attractive investment opportunities.

If you are interested in exploring investment opportunities that offer the potential for unexpected income and price appreciation, consider looking into these special dividend hopefuls identified by Morgan Stanley. Stay ahead of the market by investing in companies with strong fundamentals and potential for growth. Visit Extreme Investor Network for more exclusive insights and investment opportunities.

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