Vita Group Limited (ASX: VTG) shares surged 3% in early trade on Friday after the company announced a special dividend of 3 cents per share to be paid on December 5.
Great Management
Vita's shares have performed well this year after investors finally saw the opportunity in a company that operates 109 Telstra Corporation Ltd (ASX: TLS) retail and business stores. Vita's exceptional management and rollout of Telstra stores generated a 66% increase in underlying net profit from only a 4% increase in revenue in the 2014 financial year.
Huge Dividend
The strong operational performance allowed the company to offer investors a dividend yield of over 7% during the first six months of 2014, however a rally from 78 cents to $1.20 over the last three months pushed the yield down to only 4%.
Special Dividend
The benefit of operating a company with low capital expenditure requirements is that Vita throws off enormous amounts of free cashflow. This has allowed the company to announce a 3 cents per share special dividend which will take the 2014 calendar year payout from 4.64 cents to 7.64 cents, or a fully-franked yield of 6.4% based on a price of $1.20. When grossed up for franking credits this equates to a yield of 9.1%.
