Charlotte-based retailer Cato said Wednesday it will issue its scheduled quarterly dividend early to investors, to spare them from potential tax increases next year.
Cato, which operates more than 1,300 apparel and accessory stores, said its dividend of 25 cents per share was originally scheduled to be paid Jan. 4. The board of directors decided to speed up that payment, and will issue the dividend six days earlier, on Dec. 28.
The Board of Directors chose to accelerate the payment to benefit shareholders affected by any 2013 tax increase, Cato said in a news release.
With about 27.5 million shares outstanding, Catos move will affect about $6.9 million worth of dividend payments.
The tax rate on dividends was lowered to 15 percent under former President George W. Bush, but the rate is poised to revert to the normal income tax rate if Congress takes no action.
The ordinary income rate maxes out at 39.6 percent.
Wal-Mart, the worlds largest retailer, said Monday it also will move its dividend up from early January to late December in order to avoid possible tax increases.
While Cato and Wal-Mart are simply moving up their normal dividends a few days to beat a presumed deadline, other companies are going further.
Bloomberg News found 59 companies in the Russell 3000 have declared special dividends this year, four times as many as last year.
Many are doing so to return cash to shareholders before the potential higher rates take effect.
Commerce Bancshares Inc., a Kansas City, Mo., company, declared a one-time payment of $1.50 a share to get shareholders cash while the lower rates are in effect.