The Biggest Dividend Windfall in 60 Years

In December 2012, over 380 publicly traded U.S. companies issued one-time huge dividends to their shareholders. They include many of America’s blue-chip names:

  • Discount warehouse Costco paid $3 billion to shareholders…with a $7 per share dividend
  • Casino Las Vegas Sands paid over $2.2 billion to shareholders
  • Book publisher McGraw-Hill returned $700 million – or $2.50 per share – to its shareholders
  • Real estate investment trust Alexander’s paid a whopping $122-per-share dividend

These huge payouts totaled to the largest monthly dividend payout since 1955.biggest dividend

Compelling evidence suggests we could be at the dawn of another period of epic payouts.

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Editor’s Note:

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But first, let’s examine what happened in 2012.

If you remember, Congress and President Obama were deadlocked over the “Fiscal Cliff.”

In short, Congressional Republican leaders wanted the Treasury to adhere to its debt limit. Concurrently, they wanted to maintain George W. Bush’s previous tax cuts. President Obama had his own agenda. He wanted alternative tax and spending concessions.

A compromise ensued. Congress and the White House agreed to a small tax increase, and a spending bill to prevent a shut-down.

But there was a catch for investors. The compromise would increase taxes on dividends effective Jan. 1, 2013.

So to shield shareholders from the dividend tax hit, U.S. corporations let loose a tsunami of one-time dividends.

So anxious were corporations to return money to investors, many of them turned to the bond market to raise additional cash.  According to The Wall Street Journal, “In the last two months of 2012, blue-chip U.S. nonfinancial companies sold $178 billion of bonds. That compares with $60.6 billion a year earlier…”

But most investors were preoccupied. They, like most everyone, were focused on the November election, turmoil in the Middle East, domestic tragedies like the Sandy Hook massacre and ongoing political sniping. Many were oblivious to the potential tax hit and the rush by corporate America to pay dividends.

December 2012 was the single best month for income investors in at least 57 years.

But we could be on the precipice of another historic period for dividends.

And it’s likely that again, most investors will miss out. They’ll be too distracted by the presidential election, the rise of ISIS, crisis in Europe, and economic issues at home.

Another debt-ceiling debate looms for 2017. We could see a repeat of 2012 in 2016, except with even more dividend payouts.

What’s my rationale?

I see the same blueprint. America’s budget problems have only worsened. We’re further in debt, and two of the top three presidential candidates promise to raise taxes. Nothing was really resolved in 2012.

The can was kicked down the road to 2013 … 2014 … 2015 and now 2016…

That’s bad news for some, but good news for others. Investors could see another dividend windfall in 2016.

And just like they did in 2012, American corporations will protect their shareholders from a new tax regime by returning cash through huge special dividends.

In the next issue of Dividend Alerts, we’ll examine how each presidential candidate could impact dividend payouts … how to prepare for changes in Washington … and how to reap a huge profit windfall.

Published by Wyatt Investment Research at