Oracle Announces Three Dividend Payments by Year End to Avoid Fiscal Cliff

By: Kevin Green  |   December 5th, 2012   |   Business, News

Enterprise software developer, Oracle, made public on Monday, December 3 that the company would be making three separate dividend payments by the end of December. The company is looking to get dividends for three quarters that were originally expected in 2013 out to stock owners before the end of 2012. The move from the technology giant puts it in league with other corporations like Cisco who have announced early dividend payments to avoid getting hit by proposed tax increases coming to the U.S. in 2013.

 

The proposed tax increases for capital gains could be two times what high-income earners are currently paying. The reason behind the tax hike is the automatic mechanism that will push up the tax rate on January 1. This has been referred to popularly as the fiscal cliff.

 

In the United States, dividends are charged with a 15% tax rate that will go up significantly after the fiscal cliff. The dividend that Oracle announced for early release will total 18 cents per share. The statement that was release by the software maker stated that the accelerated dividends would be in place of the ones that would have been paid out next year.

 

Oracle also clarified that company CEO, Larry Ellison, was not involved in the decision. Ellison in the company’s largest stake holder and should be the biggest beneficiary of the move by the company. Ellison’s 1.1 billion shares of Oracle shares will give him $198.9 million in dividend payments this year.

 

Other corporations that have chosen to move their dividend forward include Wal-Mart, Costco, Hot Topic and Dillards. All have made the decision to pay an early dividend and avoid the tax hikes that are expected to take place next year.

 

Source: All Things D