Department Store Dillard's Unveils Special Dividend


Shutterstock photo

With the tax rate on dividends possibly rising in 2013, many companies are announcing special dividends to spare shareholders from an increased tax burden.

Department store operatorDillard's ( DDS ) announced a special dividend late Monday of $5 a share.

"This special, one-time dividend of $5 per share reflects our strong financial position and underscores our confidence in Dillard's," said Chief Executive William Dillard II in a press release. The company did not mention the possible tax increases on dividends.

Companies fromDrew Industries ( DW ) toLas Vegas Sands ( LVS ) to TransDigm ( TDG ) recently have announced special dividends paid out this year, before taxes go up.

Dillard's board also declared a regular quarterly dividend of a nickel a share. Both the regular and the special dividend will be paid Dec. 21 to shareholders of record Dec. 7.

Without the special dividend, Dillard's doles out 20 cents a share annually to shareholders.

This gives the stock an annualized yield of only 0.2%, which is the lowest among the six dividend-paying companies in the Retail-Department Stores industry group. But with the special dividend, its yield gets jacked up to about 5.9%.

The company's regular payout has slowly increased in the past two years after holding steady at 16 cents a share annually for a number of years. Dillard's most recently raised its quarterly dividend in May 2011.

Earlier this month, Dillard's smashed expectations with Q3 earnings that surged 100% to 96 cents a share, excluding some extraordinary tax items. It beat views by a whopping 24 cents.

The firm's sales grew 5% to nearly $1.49 billion. Generally big profit growth should be accompanied by sizable revenue growth.

Analysts see the company's full-year profit jumping 50% to $6.33 a share. Dillard's rallied to an all-time high Tuesday. The stock is not a fast mover, but held up well during the recent market correction.

The stock cleared a 79.33 buy point in a six-week flat base Nov. 1 in volume that grew 53% above average. But it's now extended past that entry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: DDS , DW , LVS , TDG

More from Investor's Business Daily


Investor's Business Daily

Investor's Business Daily

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by