Las Vegas Sands Announces Special Dividend Ahead of Fiscal Cliff
Shares of Las Vegas Sands (NYSE: LVS) jumped in price after the company announced yesterday that it will pay out a special cash dividend of $2.75 per share on any common stock. The dividend is payable on December 18th to all shareholders of record on December 10th.
In after-market activity yesterday, the company's share price rose 4.7 percent to $46.09. Early on Tuesday, shares were up a little more than four percent.
The chairman of Las Vegas Sands, Sheldon Adelson, said, “The cash flow of our current operations and the strength of our balance sheet have put us in the enviable position of both returning capital to our shareholders while at the same time staying true to our roots as a growth company.”
Las Vegas Sands reported net revenue of $2.71 billion in the third quarter of 2012, an increase of 12.5 percent compared to Q3 of last year. With the release of a positive report for the third quarter, Las Vegas Sands also announced a 40 percent increase in their quarterly dividend going in to 2013, putting their annual dividend at $1.40 per share for 2013.
The special dividend is a further indicator of the company's desire to reward shareholders for their investment, and the announcement continues a trend of other companies issuing special dividend payments after showing positive third quarter numbers. Just last week, Sturm, Ruger (NYSE: RGR) and Tyson Foods (NYSE: TSN) announced special dividend payouts after positive Q3 showings. Brown-Forman Corporation (NYSE: BF-A)(NYSE: BF-B) and Ethan Allen Interiors (NYSE: ETH) made special dividend announcements this week.
The decision to issue special dividends may be coming from anxiety about the fiscal cliff, and the likelihood of dividend taxes increasing at the start of 2013. Dividend tax rates could climb from 15 percent to 43.4 percent when the new year begins and the terms of the Budget Control Act of 2011 go into effect. Automatic tax hikes totaling approximately $500 billion could take effect overnight, and companies are looking for solutions to the problem should the government fail to mitigate the fiscal cliff.
In the meantime, stock indexes are slumping, and even a potential reset of the dividend tax to 30 percent will still double the current rate. Companies with spare cash on hand, like Las Vegas Sands, are avoiding the market slippage heading into the end of the year by issuing large one-time dividends, but it remains to be seen what actions the federal government will take, and what impact any potential maneuvers will have on the market.
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