Costco declares "special dividend" to beat tax increase for shareholders

[Freeper]

RoxyNexus (29 posts)

Costco declares "special dividend" to beat tax increase for shareholders


 
What Costco's Special Dividend Means for Shareholders

Costco Wholesale (Nasdaq: COST ) issued two related press releases Wednesday, announcing that it would pay a special dividend before the new year, and that it would fund this special dividend with a new debt issuance at very agreeable rates. The company also announced strong November sales. This news was somewhat undercut by a slight downgrade to Costco's credit rating.

According to a statement, Costco will pay $7 per share on Dec. 18th, representing a 7.25% yield on Tuesday's close price of $96.51. Accordingly, shares rose 6.3% in Wednesday's trading. CFO Richard Galanti also affirmed that the company would be paying its regular quarterly dividend, and that the special dividend would have no effect on planned share buybacks or capital expenditures.

The move to pay a special dividend is a direct response to the "fiscal cliff," the austerity package of spending cuts and tax increases scheduled to come into effect on Jan. 1 unless a divided, polarized Congress can act to prevent it. Since 2003, qualified dividends have been taxed at the same rate as long-term capital gains -- 15% for most taxpayers. However, this policy is set to expire with the fiscal cliff, allowing dividends to be taxed as regular income. This means that high-income earners will see the tax on their dividends more than triple, from 15%, to 39.6%, if the cuts expire as scheduled.


They're issuing debt, in the form of bonds, to accomplish this little favor for the shareholders.

http://www.fool.com/investing/general/2012/11/29/what-costcos-special-dividend-means-for-shareholde.aspx

http://www.democraticunderground.com/10021903397

Why is a good progressive company like Costco helping people not pay their fair share?
I would think the shareholders would be happy to pay higher taxes since it is the patriotic thing to do according to the dems.

Gman (20,847 posts)
2. Cut Costco some slack

Last edited Thu Nov 29, 2012, 08:03 PM USA/ET - Edit history (1)

I understand that they pay great wages and have great benefits. I believe the CEO is only paid $500K/yr. Let 'em keep their shareholders happy. The CEO has long resisted calls from shareholders to cut wages and benefits.

Even if that was true 500k is enough to make him one of those stinking rich bastards that need their taxes raised.

former9thward (5,101 posts)
4. CEO was paid $3.5 million last year.

A lot of companies pay their executives fairly low salaries and make it up with stock and "other fees". http://seattletimes.com/html/businesstechnology/2016881535_costco29.html

He's a filthy 1 percenter.

HiPointDem (8,696 posts)
3. lots of corporations doing the same thing. walmart to name one.

But walmart is evil.

[SSG Snuggle Bunny]

It must be hard to keep a religion that is so frequently foiled by reality.

Even shamanists try to work within the observed world but for leftists every thing is about what gratifies them and then trying to rationalize it.

[zeitgeist]

It must be hard to keep a religion that is so frequently foiled by reality.

Even shamanists try to work within the observed world but for leftists every thing is about what gratifies them and then trying to rationalize it.

Now now SSB, a religion that features witches, warlocks and poltergeists, that has no problem believing socialism doesn't create dictators can't be all bad can it?  

Three cheers for the Secular Humanists.  Hip, hip, oh the heck with um.   

[Karin]

It must be hard to keep a religion that is so frequently foiled by reality.

Something else that must be exhausting is all the spinning required to explain away and justify all the contradictions and hypocrisy.  It exhausts me to read them do it.