stock dividend

[btstiff]

I have shares in community banks. they are being bought by susquehanna bancshares. They are giving 1.5 shares of susquehanna for each share of community. Susquehannas dividend is $1.00 a share. Will it remain the same after they acquire community or will it drop because of more shares on the market.

thanks, Bill

[Stocktrading101]

Hmmm... that is a really good question Bill. After the buyout there will be more shares, so you'd think that would cause the company to alter their cash dividend. Furthermore they probably just spent a ton of money acquiring the company.

If the company doesn't make an announcement regarding the dividend, I would imagine it wouldn't change. This is just a guess though! Is the company tracked by yahoo finance? I would just check their news and see if the company makes any announcements regarding their dividends over the next few weeks.

Do you know when is the acquisition and share transition expected to be completed?

[btstiff]

As far as i can gather everything is to be completed by november of this year. Thanks for your reply.

regards, Bill

[gijoe9]

There will be an anouncemewnt if there is a change in the dividend but it may not be easy to find this news. The companies site will have the anouncement. If there is no anouncement then it will stay the same. If there is enough cash in the coffers the company will be reluctent to lower dividends unless it has to as this may adversly effect share pricing.
If you know about reading financial reports and such you could do some research and try to guess the effects of the deal on the dividend. If Community bank was paying a dividend of close to $1.00 a share then I would say they will stay the same after the sale.

Really only time will say for sure what will happen regarding the dividend. Good luck!

[btstiff]

Hi Joe, Community bank is presently paying $.84 cents a share. Thanks much for your reply.

Bill

[WallStGolfer31]

Bill, to answer your question you'll first need to know what kind of policy the Board of Directors has on dividends.

A percentage based dividend policy is determined as a percentage of net income for distribution rather than a set nominal amount. Ceteris paribus, the dividend will be less per share than from before the aquisition. A stable dividend policy on the other hand tries to appeal to investors who have a preference for steady dividends, a clientele effect, per se. Ceteris paribus, with a stable dividend policy, this will result in the dividend per share remaining constant regardles of the acquisition.

What dividend policy do their Board of Directors follow? I have no clue, but they follow one of the above, so if you can find out, you'll have your answer.