Before the start of today’s trade, Citigroup Inc. announced a 1 for 10 reverse stock split and said it plans to pay a quarterly dividend of a penny a share in the second quarter. Reverse split and then a penny dividend? A penny?
“The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year,” said Chief Executive Vikram Pandit in a press release.
Rarely does a revers split work out well for stockholders. A 1 for 10 split with today’s presplit price is really a one-tenth of one cent dividend. Vikram, that is not much of a return. Don’t you think something more worthwhile would make more sense?
My plan is to pickup Citi under $35 after the split. Long term, I’m still bullish on C. Short term, I’m completely out.