Charlotte-based Cato Corp. announced Monday that it will pay its stockholders a special $1-per-share dividend this month in advance of the tax increases and economic uncertainty possible as part of the fiscal cliff next year.
The apparel retailer also will pay all of its scheduled 2013 dividends before the end of this year, bringing the total payment to $2.25 per share on Dec. 28. That is nine times the usual quarterly dividend.
Given the very unusual circumstances of the fiscal cliff and uncertainty of the federal tax treatment of dividends, paying both a special dividend and our 2013 dividend now is in the best interest of our long-term shareholders, CEO John Cato said in a statement.
The company noted that the total dividend will cost $66 million.
Cato Corp. had already moved payment of its regular 25-cent dividend up by a week so it would fall before 2013, joining a number of companies seeking to pay stockholders before the automatic tax increases and spending cuts scheduled to take effect Jan. 1.
Charlotte-based Sonic Automotive announced Monday that it would do the same. Its 2.5-cent dividend will be paid Dec. 21, rather than Jan. 15.
Congress is currently negotiating a deal to avoid the fiscal cliff. But even if a deal is reached, an increase in the taxes on dividends is a real possibility.
Catos chief executive said by email that the decision to move its dividend schedule was not a political statement.
The decision made by our board was purely in response to the uncertainty of how the fiscal cliff may be resolved, and the fact that it could impact all taxpayers regardless of income level, he said.
Cato stock closed up 3.2 percent, to $29.99, Monday.
Dunn: 704-358-5235 Twitter: @andrew_dunn
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