Friday is the Last Day Companies Can Pay Special Dividends

The rapidly approaching fiscal cliff has created a new trend in the stock market: companies paying out excess cash in the form of special dividends. Over the last two months or so, more than a dozen companies have opted to pay out these special dividends, putting cash into the hands of shareholders before the calendar turns for the year. With only a few weeks until the calendar runs out on 2012, it isn't known how politicians will resolve the fiscal cliff -- or even if they will be able to at all. Still, it is widely anticipated that whatever happens with regards to the fiscal cliff, it is likely that taxes on dividends -- particularly dividends paid to high income earners -- will go up in 2013. Among the companies that have paid special dividends in the last few weeks include Strum, Ruger RGR, Las Vegas Sands LVS, Dick's Sporting Goods DKS, Tellabs TLAB, Community Health Systems CYH and Ralph Lauren RL. Other companies, like Walmart WMT, have not paid out special dividends but have instead shifted the date of their dividends up, essentially front-loading 2013 dividend payments into the end of 2012. Zortrades notes that, per an SEC rule, if a company wants to pay a special dividend in 2012, they have only one day left. Traders ought to take note: there could be a flurry of special dividend payments in Thursday's after-hours session, and even more on Friday. On the other hand, come Monday, some stocks could sell off. Shares of Gap GPS traded lower earlier in the month when the company stated that it would not be paying a special dividend -- contrary to the beliefs of many traders who had may have gone long the stock on an expectation that a special dividend was forthcoming.