Analyst Expects More Special Dividends Ahead
|The Associated Press|
A number of companies have moved up their quarterly payout or issued a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income starting in January.
Companies are reviewing their dividend policies now as the "fiscal cliff" looms. Since 2003, investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless
Keefe, Bruyette & Woods analyst
As a result, Cannon expects further announcements going into year-end.
The analyst in October identified 15 financial firms that he expected would make special dividend payments. To date, seven of these firms have committed to special dividends. Another 11 financial firms that weren't initially identified have also announced such payouts. Cannon expects more financial firms will join these ranks in the remaining weeks of the year.
He still expects the following firms from his initial list are still likely to announce special dividend payments:
The analyst noted, however, that the largest financial firms, those designated as systemically important, are precluded from such announcements as they do not have Federal Reserve approval
Shares of firms that have committed to special dividend payments have reacted favorably to the news. The shares of those still pending a commitment had a mixed result in trading Monday.
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