Target Price Achieved: NEWM is trading above our $15.50 target.
The following is a re-iteration of yesterday’s alert concerning NEWM. For our record keeping the trade will be closed out at today’s share closing price.
– Tim
Trade Close Approaching!
On July 31, New Media Investment Group (NYSE: NEWM) acted as predicted and declared the company’s first dividend. The 27 cent payout provides a 7% yield, but the goal with this trade was to capture the price gain on the first dividend announcement. Today, NEWM closed at $15.32, just $0.18 below the target price set when the trade was recommended on May 31.
With a August 12 record date, NEWM will go ex-dividend on Friday, August 8. We will close the trade (and you should too) if NEWM hits $15.50 during the next couple of days, but no later than the close on Thursday, August 7, before the stock goes ex-dividend.
On the ex-dividend date, the share price will drop by the dividend amount and if you still own the shares, you will receive the $0.27 per share. However, after the dividend is earned, I expect the share price to sell off and we will be looking for a new, lower entry price. At the target sell price, this trade will result in an over 10% return in a little over two months. That’s better than holding for a year to earn 7% in dividends.