December 31 is less than 50 days away. That day all sorts of tax goodies are set to go away. Unless Congress acts, the dividend tax-advantaged 15% rate ends. Come January 1, dividends will be considered ordinary income and be taxed according to your personal tax bracket.
With that in mind, last January, I selected seven companies likely to give large special dividends. The list - Armstrong World (AWI), Buckle (BKE), Limited Brands (LTD), MTOX Scientific (MTOX), Stamps.com (STMP), Werner Enterprises (WERN), and Wynn Resorts (WYNN) - is quickly getting smaller. So far, all of them have announced large special dividends except for Stamps.com (and MTOX Scientific which was taken over early this year at a premium). To get on the list, a company had to fill two key criteria: Insiders had to hold a high share percentage and the company had to have given a special dividend in 2010, the last time the dividend tax treatment was scheduled to end.
Werner Enterprises, a transportation and logistics company, became the latest to announce, giving investors a $1.50 special dividend in addition to its regular $0.05 dividend. Werner loves to reward its shareholders - this is the fifth consecutive special dividend. This year was different from last year's special - it was much larger as Werner squeezed as much excess cash as possible into the payment before the favorable 15% tax treatment ended. Thank you, Werner.
Here's the list of special dividends so far this year.
Who's Left On The Special Dividends List?
Just about all of my predicted special dividend announcements have come to pass. Only Stamps.com is left.
Stamps.com is a cash-laden company and no debt. It's given two special dividends, one in 2004 and one in 2010. Three of the board members own 10% of the company.
I'm looking for a $1.00 special dividend.
The reasoning: Stamps.com has $37 million in cash on its balance sheet. A $15 million special dividend, or $1.00 a share, will leave the company $22 million - about the amount left after Stamps.com gave its last special.
Six down. One remains. Stamps.com, it's up to you. Time to squeeze out a juicy dividend before 2012 ends.
Disclosure: I am long BKE.
Additional disclosure: Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.