More companies join special dividend bandwagon

Grabbing a hang glider before hitting the cliff?

The list of companies declaring special dividends continues to increase in advance of the “fiscal cliff,” with Limited Brands, PetSmart and TD Ameritrade joining the list. With several tax benefits, including low-rates on dividends, coming off the books in January, several companies have either declared a one-time dividend payment, or moved their payments into December as opposed to 2013.

Limited brands, parent of Victoria’s Secret, Bath & Body Works and La Senza, declared a dividend of $3 per share payable on Dec. 26, while PetSmart is moving its quarterly dividend of $0.165 per share to Dec. 31 as opposed to February. Ameritrade will pay a $0.50 special dividend on Dec. 31 while Expedia also jumped on the bus, announcing a $0.52 payout as of Dec. 28.

Since 2003, most taxpayers have paid a 15% tax on dividends while those in the lowest bracket pay nothing. If the expected changes to the tax act take effect, dividends will be treated as ordinary income, with rates creeping as high as 39.6%.

Petsmart (PETM : NASDAQ : US$70.02), Net Change: -0.23, % Change: -0.33%, Volume: 547,324
Limited Brands (LTD : NYSE : US$50.57), Net Change: -0.09, % Change: -0.18%, Volume: 2,636,044
Expedia (EXPE : NASDAQ : US$60.04), Net Change: 2.33, % Change: 4.04%, Volume: 3,423,473

TD Ameritrade Holding (AMTD : NYSE : US$16.53), Net Change: 0.19, % Change: 1.16%, Volume: 1,526,894

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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