Dillard's declares $5 special dividend

Dillard's to pay special $5 special dividend along with quarterly dividend of 5 cents

Associated Press

LITTLE ROCK, Ark. (AP) -- Department store operator Dillard's Inc. said Monday it will pay a special cash dividend of $5 in December.

The company also declared a quarterly dividend of 5 cents. Both dividends will be payable Dec. 21 to shareholders of record on Dec. 7.

CEO William Dillard said the move reflects the company's strong financial position and confidence.

Dillard's had 47.1 million shares on the market as of Aug. 25, implying the company will pay about $235.5 million in the special dividend.

Dillard's 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 starting in January.

Many companies are reviewing their dividend policies now that it appears investors could soon pay higher taxes. 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.

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