Tags: fiscal | cliff | dividend | stocks

Fiscal Cliff Provides Bounty for Some Dividend-Stock Investors

Tuesday, 30 Oct 2012 09:23 AM

By Dan Weil

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The Dec. 31 fiscal cliff offers an upside for some dividend-stock investors.

At least four companies in the Standard & Poor’s 500 have decided to pay special dividends before the deadline. And experts say others will follow suit, The Wall Street Journal reports.

The maximum dividend tax rate now stands at 15 percent, but that will go up to 39.6 percent if Congress doesn’t take action to ease the tax hikes scheduled to begin Jan. 1.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

So the companies are making early dividend payouts to help their shareholders avoid big tax hits.

Among the S&P 500 companies doing so are Wynn Resorts (WYNN), with a $750 million payment; hospital manager HCA Holdings (HCA), with a $1.1 billion payment; and chemical company LyondellBasell Industries (LYB), with a $1.6 billion payout, according to The Journal.

Goldman Sachs recently put out a list of the 15 companies most likely to provide a pre-New Year’s dividend gift.

In addition to Wynn and aircraft components supplier TransDigm Group (TDG), which already announced payouts, Goldman analysts cited MasterCard (MA) and specialty retailer Williams-Sonoma (WSM).

Early dividend payers aside, companies providing modest but growing dividends might occupy the most attractive area of the dividend stock universe now, writes Barron's Jack Hough.

Many companies with higher yields either face financial problems or high valuations, he says.

Hough cites four low-dividend stocks that have potential to keep increasing their payments to consider: Associated Banc-Corp (ASBC), Coca-Cola Enterprises (CCE), IBM (IBM) and Stryker (SYK).

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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