Looking for a Shower of Dividends
When it comes to the cash payout of special dividends, prolonged shareholder activism is usually what gets the job done -- and over the coming weeks and months, investors may be treated to cash payouts thanks to the activist hand of none other than Uncle Sam. The catalyst, of course, will be the expectation of higher taxes. Any business that is sitting on a pile of cash and has even the slightest inkling of paying out a dividend has every incentive to do so now rather than later.
As things now stand, the tax rate on dividends is set to increase dramatically on Jan. 1, 2013. If a company is harboring a payout, it has every incentive to announce and make that payout by year-end. As a result, in the next two months the market could perhaps see a flurry of special-dividend announcements. If the dividend tax rate does increase, a dividend-paying company could hike the year-end dividend in lieu of gradual increases next year. My assumptions are purely speculative, but no one can deny that both corporations and their investors would be better served by paying dividends today rather than waiting until 2013. ...413 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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