Why Quad/Graphics' Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Quad/Graphics jumped 18% today, after news of a big dividend.

So what: The company said it was increasing its quarterly cash dividend in 2013 to $0.30 from $0.25. It will also pay a special dividend of $2 per share on December 28, just before taxes are due to go up.

Now what: The reaction to dividends recently has been out of control. All the company did was announce a return of cash to shareholders, which shouldn't inherently change the value of the business. The stock shouldn't be worth more today than it was yesterday. In the end, these dividend driven pops haven't lasted in other stocks, and I'm adding a short-term underperform call on My CAPS page, because I don't think the stock will maintain this pop over the next few weeks.

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The article Why Quad/Graphics' Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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