PHOENIX (AP) -- PetSmart Inc. has declared a quarterly common stock cash dividend of 16.5 cents payable before the end of the year, protecting its shareholders from potential tax increases next year.
The Phoenix-based pet retailer said late Monday that it will pay the dividend on Dec. 31 to shareholders of record as of Dec. 19. The fourth quarter dividend would normally be paid in February 2013 to shareholders of record as of Feb. 1, 2013.
PetSmart 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 on them. 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.
PetSmart shares slipped 5 cents to $70.20 in midday trading Tuesday. Its shares have traded in a 52-week range of $47.94 to $72.75.