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Heico increases special dividend

HOLLYWOOD, Fla. (AP) -- Heico Corp. said Thursday that it would nearly double the size of its previously announced special dividend.

The defense and aerospace contractor's new dividend of $2.14 per share will be paid on or before Dec. 31 to shareholders of record as of Dec. 17. That is up from plans it announced in late November to pay $1.14 per share.

The company will pay the special dividend together with its previously announced regular semi-annual 6 cents-per-share cash dividend for a total of $2.20 per share. The timing of the regular payment was moved up to December, instead of January, to take advantage of current low tax rates on tax dividend income.

Heico said that since it made its dividend announcements, shareholders have expressed such "strong enthusiasm" for the payments that the board decided to increase the amount of the special dividend. The dividends are being paid for with money borrowed under the company's revolving credit line.

It is one of a growing list of companies 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.

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.

Heico, based in Florida, sells products in the niche segments of the aviation, defense, space, medical, telecommunications and electronics industries to airlines, electronics equipment manufacturers and defense and military agencies.

Shares of Heico increased 61 cents to $42.08 by midmorning.