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Graincorp offers up special dividend

Falling results for Graincorp (ASX: GNC) shareholders may have come at the right time — just as investors prepare for a special dividend.

Graincorp reported largely flat first half earnings of $227 million EBITDA down from $235 million for HY2012. Similarly NPAT was $109 million but down from $122 million a year earlier. The result stemmed from harvesting in eastern Australia returning to a more typical size and solid results from its processing businesses, including GrainCorp Malt and GrainCorp Oils.

The dip in results hasn’t been represented in a sell-off of the share price like many other stocks have witnessed because of one important thing — the company has been sold.

In April the company signed a conditional offer from Canadian firm Archer Daniels Midland for $13.20 per share. As a result, shareholders will also be compensated with a special dividend, taking the total return to 25 cents per share.

However, Graincorp’s sale represents a recent trend of foreign entities purchasing local agricultural businesses, it has not given stock market investors many options if they want some exposure to the sector. Despite the immense agricultural capacity that Australia offers, it has only four big companies remaining publicly listed.

The Australian Agricultural Company (ASX: AAC) is beef cattle company involved in growing, feedlotting and trading, grazing and farming in Australia, but since February the share price has dropped over 30%.

Select Harvests (ASX: SHV) is an almond producer which grows, processes, packages, sells and distributes almonds from its own orchards. The company has outperformed the market in the past 12 months, up 146.6%.

Foolish takeaway

Tassal (ASX: TGR) has also gone from strength to strength, this past year the share price is up over 50% and despite the huge gain it can still be considered ‘cheap’, with the Atlantic salmon provider having a P/E of only 11. In addition, the share has a large upside and investors will be rewarded with a 4.3% dividend.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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