Coffee Holding Co. Inc. said that its quarterly dividend will be larger and earlier-than-usual ahead of possible tax hikes.
The company said Thursday that it will pay a dividend of 6 cents per share on Dec. 28 to stockholders as of Dec. 17. That is double the previous quarterly dividend. The company traditionally pays its fourth-quarter dividend in January.
Coffee Holdings is the latest company to move up its quarterly payout, or issue a special end-of-year payment, to protect investors from potentially having to pay higher taxes on dividend income next year.
Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4 percent.
Coffee Holdings said that given the likelihood of a change in tax rates, it felt it was prudent to speed up the timing of the payment and increase the payment size.
The company, based on Staten Island, N.Y., is a wholesale coffee roaster and dealer that sells private label and branded coffee products throughout the U.S., Canada and abroad to wholesalers, supermarkets and other retailers.
Coffee Holding shares fell 14 cents to $7.35 in afternoon trading.