Diary of a Dividend Diva: Isn't That Special?
One of the unintended yet positive consequences of the fiscal cliff is the looming incentive to return cash to shareholders now, while a lower rate on dividend income prevails, rather than waiting until next year, when the new rates could be punitive. Most dividend recipients are well aware that, on Jan. 1, the tax rate on dividend income will jump to at least 18.8% -- the current rate, plus a scheduled 3.8% surtax on high incomes. However, Congress could reclassify dividends as ordinary income, thus pushing the highest marginal rate of taxation up to 39.6%. That is only federal, of course!
Some enlightened boards of directors have noticed this risk, and are acting now to return cash to shareholders. The result has been a trend of special dividends being paid before year-end, and we can expect that trend to accelerate in the weeks ahead, especially if President Obama wins the election. Here are some of the recently paid and upcoming specials....302 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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