CHARLOTTE, N.C. (AP) -- Women's clothing company Cato Corp. said Monday that it will pay a special $1 dividend this month and move up its 2013 payment of $1 to December because of an expected tax rate increase next year.
That's in addition to the company's regular quarterly dividend of 25 cents.
Cato will make all three payments on Dec. 28, costing it $66 million.
The Charlotte, N.C., retailer 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.
Investors currently pay a maximum 15 percent on dividend income. But that historically low rate will rise to as much as 43.4 percent for the highest earners in January unless Congress and President Barack Obama reach a compromise on taxes and government spending.
Cato also said Monday that its board expects to increase the regular quarterly dividend by 5 cents to 30 cents, a 20 percent bump. Based on the plan announced Monday, 25 cents of that would have been paid in December. So if the increase is approved, shareholders will get another 5 cents per quarter next year.