RDA Microelectronics Inc.’s shares jumped Friday after the semiconductor company announced a special dividend.
THE SPARK: The company announced late Thursday that it would spend $57 million to pay a one-time dividend of 20 cents per ordinary share, or $1.20 per American depositary share. The dividend will be paid Oct. 18 to shareholders of record as of Oct. 1.
THE BIG PICTURE: RDA, based in China, went public two years ago. The company designs chips that help smartphones and other gadgets connect to communication networks.
CEO Vincent Tai said the dividend is a result of the company’s exceptional financial performance over the past several years and strong balance sheet.
THE ANALYSIS: Caris & Co. analyst Craig Ellis said the payout offers a remarkably rich 11.7 percent yield, well above the 1.1 to 3.9 percent range seen in the rest of the sector. He said that even if shares surge to his $16 price target, the yield would still be at an above-average 7.5 percent.
Ellis said the move, which follows an earlier share buyback authorization, is another sign that management believes the company is on track. He recommended that investors accumulate shares to take advantage of the “unusually attractive opportunity.”
SHARE ACTION: Shares jumped 86 cents, more than 8 percent, to $11.10. Its shares are at the higher end of their 52-week trading range of $7.06 to $14.25.