NEW YORK (AP) -- Auction house Sotheby's said Thursday that it was raising its quarterly dividend by 25 percent and paying the next two installments before the end of the year, to prevent investors from possibly paying higher taxes on them in the new year.
The company said it would pay the accelerated dividend of 20 cents per share on Dec. 31 to shareholders of record as of Dec. 26. The one-time payment represents the next two quarters' worth of dividends. Previously, the quarterly dividend had been 8 cents per share, but it will be increased to 10 cents.
Sotheby'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 if the government goes over the so-called "fiscal cliff."
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.
Sotheby's shares were down 36 cents at $30.52 in afternoon trading Thursday.