Trade Close: Sunstone Hotel Investors
I initiated the trade in Sunstone Hotel Investors Inc. (NYSE: SHO) on December 18th to take advantage of a pending year-end special dividend announcement. SHO pays a small quarterly dividend and then announces a large one-time payout to get the company up to the REIT mandated payout of at least 90% or net income.
Last week on December 29, without announcement, SHO went ex-dividend for a $1.26 per share end-of-year dividend payment. I have not seen any press release announcements and there is nothing on the Sunstone website about the dividend. Yet both Google and Yahoo Finance show the ex-dividend and dividend amount. The price drop on December 29 also reflects the dividend amount.
As a result, the 30 Day Dividends position in SHO has earned a stealth $1.26 per share dividend. At today’s share price of around $12.50 we have a small gain of about 4%. The purpose of the trade was to gain from the announcement of a large dividend. That did not happen, so there is no longer a reason to keep the position open. We’ll take the small profit and look for the next opportunity.
Recommendation: Sell any open position in SHO to close the trade and lock in a small profit that includes the $1.26 per share year-end dividend.