EmergingGrowth.com, a leading digital financial media company, Reports on the Companies Sprinting to offer unique dividends before we ride off the Fiscal Cliff such as (Oritani Financial (NASDAQ: ORIT), AAON, Inc. (NASDAQ: AAON), Insperity, Inc. (NYSE: NSP) and Espey Mfg. & Electronics (NYSE: ESP). Also visit Emerging Growth for more info on its recent coverage of American Vanguard Corp. (NYSE: AVD).
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A funny thing happened on the way to the fiscal cliff. A number of companies are now sprinting to offer unique dividends before the end of the year because of the potential for higher taxes in 2013 as part of any "Fiscal Cliff" deal. So far this quarter, over 70 companies with market caps greater than $500 million have issued special dividend payments. Only 44 companies offered special dividends for all of 2011. Which begs the question; does offering a cash reward to shareholders improve a company’s stock performance? It all depends.
These companies are trying to compensate shareholders now just in case Congress and the White House choose to take us all over the fiscal cliff. If our elected officials are unable to collaborate and come up with a way out, dividend taxes could soar from their current level of 15 percent to as high as 43.4 percent for some investors. That’s a pretty hefty penalty for investing in the “American Dream”. Capitalism; got to love it.
Some of the special dividend payers are small and micro cap emerging growth companies such as Oritani Financial Corp. (NASDAQ: ORIT) with a market cap of $668 million. The financial company offered shareholders an individual cash dividend of $0.40 per share on its common stock. AAON, Inc. (NASDAQ: AAON), a manufacturer of HVAC components, declared special dividend of $0.12 per share. Insperity Inc. (NYSE: NSP), which provides human resources services to small and medium-sized businesses, declared a special dividend of $1.00 per share. Espey Mfg. & Electronics Corp (NYSE: ESP), market cap of $63.4 million, is also offering up $1.00 per share.
There is a down-side to this seeming largesse on the part of companies participating in the special dividend craze. The stock normally drops by the amount of the dividend received on the ex-dividend date. What you reap in the dividend, you also reap in a lower stock price. The key lies in recognizing stocks that are likely to pay out of the ordinary dividends ahead of time and benefiting from the gain in the stock price between the broadcast date and the ex-dividend date.
There may be a bout of more special dividend announcements on the horizon. As long as the fiscal cliff looms over the nation, expect more businesses to hop onto the special dividend train. Companies with strong insider ownership, respectable balance sheets, decent cash flow, and most of all, a heap of excess money, will be candidates to reward shareholders with these unique offerings.
American Vanguard Corp (NYSE: AVD) is an agricultural products company that develops and markets products for crop protection and management. Over the past five years, gross margin peaked at 44.2% and averaged 39.9%. Operating margin peaked at 16.6% and averaged 11.3%. Net margin peaked at 8.6% and averaged at 5.3%. With TTM operating margin exceeding historical averages, American Vanguard can be said to be doing fine… More at EmergingGrowth.com
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