NEW YORK (AP) -- Shares in GulfMark Offshore jumped 7 percent Wednesday after the energy sector supply company announced a new stock buyback program and declared an annual cash dividend of $1. It also said it would start paying a quarterly dividend next year.
THE SPARK: The annual dividend, which applies to the company's Class A common stock, will be paid on Dec. 31 to shareholders of record as of Dec. 21 in order to protect the shareholders from potential tax increases set for next year.
The Houston company, which transports materials, supplies and personnel for the oil industry, also said that beginning next year it will pay a recurring quarterly cash dividend of 25 cents.
In addition, GulfMark said that its board approved the repurchase of up to a total of $100 million in Class A common stock.
THE BIG PICTURE: Both the dividends and stock repurchase program will be funded with cash from operations and proceeds from the sales of non-core assets.
GulfMark said the initiation of a cash dividend and the start of a stock buyback program will both return cash to its shareholders, while also providing the company with an investment opportunity that will further boost its value.
GulfMark 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.
THE SHARES: GulfMark Offshore Inc. rose $2.16 to $33.31 in afternoon trading, after peaking at $33.78 earlier in the day. Over the past 52 weeks, GulfMark shares have traded between $27.17 and $56.41.