Here’s Costco’s Remedy for the Fiscal Cliff
Special dividends have become a moderate trend this year. A growing number of U.S. companies, including Wynn Resorts (NASDAQ:WYNN) and Tyson Foods (NYSE:TSN), have announced special dividends at four times the rate of last year. While under the Bush administration dividends rates were reduced to 15 percent, next year Congress is expected to let the dividend tax rate return to the ordinary income rate, with 39.6 percent as the highest tier.
CHEAT SHEET Analysis: Is Costco’s Special Dividend a Positive Catalyst for its Stock?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’ stock. Following Costco’s dividend announcement, its shares rose more than 4 percent, the stock’s greatest gain in more than 15 months. In early morning trading on Wednesday, shares reached $101.75. The news had such a positive effect on the company’s stock price because the payment reflects its “strong balance sheet and favorable access to the credit markets,” as Chief Financial Officer Richard Galanti said to Bloomberg.
Don’t Miss: 7 Top Gifts Boosting Stocks.