On Wednesday, Costco (Nasdaq: COST ) announced that on Dec. 18, it will pay its shareholders a special cash dividend of $7 per share. Payment will be made to shareholders of record as of the close of business on Dec. 10 and will cost the company approximately $3 billion. It will be in addition to the company's regular quarterly dividend of $0.275 per share, which gets paid out Nov. 30.
Costco CFO Richard Galanti described the dividend as Costco's "latest effort in returning capital to our shareholders while maintaining our conservative capital structure," and said the firm's "strong balance sheet," which boasts $4.85 billion cash, makes paying the special dividend possible.
A dividend paid on Dec. 18 -- or any time in 2012, for that matter -- will benefit from the current, low, 15% tax rate on dividends. After Jan. 1, however, the maximum tax rate on dividends could rise as high as 43.4% for some shareholders, if Congress begins taxing dividends at the rates applicable to ordinary income (the highest rate of which should be 39.6%), and applies a 3.8% surtax to pay for the Patient Protection and Affordable Care Act.