Dividends, Buybacks, and Spin-Offs—That’s All There Really Is
From Profit Confidential
January 10, 2013 - 1:41am
Every once in a while, the stock market gives you a gift—rather, a company trading on the stock market decides to make a division a spin-off, unleashing value for shareholders. It doesn’t happen very often, but when it does, it usually turns out to be a big gift for the owners.
There were two big spin-offs this year, and one in particular was exceedingly profitable. ConocoPhillips (NYSE/COP) divested its oil and gas refining business called Phillips 66 (NYSE/PSX). For every two shares held in ConocoPhillips, shareholders received one free share in Phillips 66 (NYSE/PSX). On the stock market, ConocoPhillips’ share price declined because of the huge spin-off, but Phillips 66 has been doing well. The result was a huge bonus to shareholders, and both these stocks pay solid dividends. Phillips 66’s stock chart appears below:
Chart courtesy of www.StockCharts.com
The other big spin-...
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