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Why Santa's Arriving Early for Dividend Investors

Nicole Seghetti
November 26, 2012

Santa is spreading holiday cheer early this season. For some investors, stockings will be stuffed with dividends in December, one month ahead of schedule. Is it simply because we dividend investors made the nice list this year? Or is Saint Nick speedily sliding down the chimney for other reasons?

'Tis the season of giving
Several companies will pay out fourth-quarter dividends to shareholders in December instead of the regularly scheduled January payout date. For example, Missouri-based industrial manufacturer Leggett & Platt (NYSE: LEG  ) , which has increased its dividend every year for more than four decades, decided to move up its dividend to December. Other companies will gift shareholders with a special one-time cash dividend by year-end.

The reason? They want to spare investors from having a bigger chunk of their dividend income taken away by the Grinch (in this case, Uncle Sam). As it stands, taxes on dividends are slated to increase next year unless Congress averts the fiscal cliff by extending Bush-era tax cuts. Among the changes that'll most impact dividend investors:

  • Qualified dividends will be taxed at an individual's marginal tax rate, up from the current 15%.
  • Marginal tax rates will rise to 15%, 28%, 31%, 36%, and 39.6% in 2013, up from the current 10%, 15%, 25%, 28%, 33%, and 35%, respectively.
  • Maximum long-term capital gains tax will revert to 20%, up from the current 15%.

By granting us dividends this year instead of next, companies will potentially save us a few bucks.

Guilty of self-gifting
But let's be honest. Major shareholders want to spare themselves the tax pain, too. Insiders and board members who own a large portion of company shares stand to benefit greatly from the accelerated dividend payout. In fact, a Markit Equities Research study  shows that companies with large percentages of insider holdings have been more likely to jockey dividends in order to sidestep higher taxes.

Here are a handful of companies doing some self-gifting this year.


Market Cap

Percent Insider Holding



$231 billion


Wynn Resorts

(Nasdaq: WYNN  )

$11 billion


Marine Products Corporation


$204 million


Werner Enterprises

(Nasdaq: WERN  )