Shenandoah Telecommunications Company (SHEN), popularly known as Shentel, declared a special dividend of $18.75 per share, totaling an aggregate of $936.6 million. The dividend will be payable on August 2 to shareholders of record on July 13. Shares soared 15.5% to close at $56.81 on July 2.
Shentel provides broadband services through its high-speed, state-of-the-art cable, fiber optic, and fixed wireless networks to customers in the Mid-Atlantic United States. (See Shenandoah Telecommunications stock chart on TipRanks)
The company expects approximately $19.6 million of the special dividend to be reinvested in the company’s common stock via its Dividend Reinvestment Plan.
The company will use the reinvested dividends to buy back the company’s shares in market transactions during the thirty days following the dividend payment date.
Shentel’s President and CEO, Christopher E. French, said, “We are excited about the growth prospects of our broadband-centric company and the opportunity to create shareholder value by providing the fastest internet services in our markets.”
On July 1, Shentel completed the sale of its Wireless assets and operations to T-Mobile USA, Inc. (TMUS) for a cash consideration of $1.94 billion, of which $684 million was utilized to pay off all outstanding debt and to terminate the facility and related interest rate swap contracts.
Following the news, Raymond James analyst Ric Prentiss reiterated a Hold rating on the stock and said, “With the Wireless sale closed, the special dividend declared, and a new debt facility in place, we expect the investor base to become very broadband-centric, and look forward to seeing how the smaller, post-Wireless company takes shape.”
Based on 2 unanimous Holds, the stock has a Hold consensus rating. The average Shenandoah Telecommunications price target of $47 implies 17.3% downside potential to current levels. Shares gained 13% over the past year.
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