One Hint That Your Company Will Announce A Surprise Cash Dividend By Year-End

Costco is just the latest of a slew of companies to dump cash on its shareholders in the form of a special one-time dividend.

And with the prospect of higher dividend taxes next year, many more companies are likely to follow.

So, how do you know if a company is going to pay up?

Obviously, the company will have the financial flexibility and the excess cash to do so.

But there’s another characteristic that stood out in 2010, which was the last time dividend taxes were expected to surge by year-end.

“Interestingly, many companies declaring specials also exhibited high levels of insider ownership,” wrote Markit in a report earlier this month. “While executive and director holdings ranged from < 1% to as high as 87%, more than half (53%) of companies exhibited insider ownership exceeding 25% of shares. Average insider holdings were 30% among the 50 companies.”

special dividend

Photo: Markit

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