Special Dividends for a Special Fiscal Cliff

On a conference call in October, Steve Wynn, chief executive officer of Wynn Resorts, noted that government decisions do affect how companies pay out dividends, but that an increase in the dividend tax could actually decrease government revenue. He explains, “The dividend policy of companies is very often affected by the tax policies of the government. When the taxes on the dividends are too high, then companies don’t distribute, the shareholders don’t get the dividends and Uncle Sam doesn’t get the tax.”

On Monday, Tyson Foods (NYSE:TSN) declared its first special dividend since 1977, while Wal-Mart (NYSE:WMT) decided to pay its fourth quarter dividend on December 27, instead of January 2. “Wal-Mart’s board recognized that there are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks,” Randy Hargrove, a spokesman for the company, explained in an e-mailed statement, according to Bloomberg.

Investors still looking for an income stream of dividends, may want to consider technology names. The tech sector now accounts for more dividends than any other S&P 500 group. Technology stocks paid 5.6 percent of the total dividends in the United States five years ago, but now account for 13.2 percent of all U.S. dividends. Major tech giants such as Apple (NASDAQ:AAPL), Cisco (NASDAQ:CSCO) and Microsoft (NASDAQ:MSFT) have all increased their dividends this year.

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