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John Thomas Financial Chief Market Analyst Wayne Kaufman on how investors can profit from fiscal cliff concerns.
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Many publicly traded firms are announcing special dividends or.
Even bumping up their dividend payouts as a result of the looming fiscal clip just this afternoon Disney announcing it will increase its annual cash dividend by.
25.
Percent.
Get back.
A total of 71 companies of -- -- special dividends so far this year compared to just fifteen last year.
So is -- Smart to chase these stocks Wayne Kaufman joins me now he's chief market analyst at John Thomas financial.
Why it's always good to have you on the show -- -- is hot new trend we're gonna have you know a special vivid and we're gonna put it out now before the end of the year seal -- the tax head.
-- makes sense for companies to do this why are they motivated you.
Definitely makes sense for them to do it you know they they say they're doing it for the shareholders and it is a benefit for the shareholders but.
They've including the ones running the company lets be real that's that's what they're finding that.
That tremendous amount of them -- on the board of directors come line they've been finding stuff like management owns on average 28% of shares and and stuff like that's -- for example Wal-Mart didn't issue a special dividend but they pulled their dividend forward even it just a little bit from January to December.
They estimate that's gonna save the Wal-Mart family a 180.
Million dollars.
It's not about you it -- about -- There were not to be able to -- to make capping.
I think you -- favour of making picks in this category.
Companies offering this special dividends ones that are still affordable you might -- -- buy it now costs go Wynn Resorts brown Foreman tell me what you like these come.
Well first of all they're in good trends to begin with I I don't like to buy stocks that are heading the wrong way which is heading self I like stocks that are.
Making new highs it shows that -- big in stretching your friend the trend is your friend whose institutional demand and basically there's demand.
Which is overpowering supply so Costco and and I have to say that I'm not a big shopper but I love going to Costco.
It's it's my favorite late I'll have a TO I mean truth be told what Wynn Resorts wouldn't what's your traction of that company is that the management -- like people did growth though.
And as -- grows they're just gonna do better and better brown Foreman and it's Jack Daniels what what more worrying what more do I have to say.
Wow that's convincing okay.
I do you think though it are we gonna get to a point though where the taxes.
On these dividends are gonna outweigh the attractions possibly.
I've I've seen some people -- that there's going to be a window.
Three to 5% dividend that might be the right thing to shop for how do you weigh in on the.
You know I don't let the dividend to me it's a little bit like the tail wagging the dog the dividend does not drive my investment decision.
And and I think that the what's going on now and it's really very interest -- -- -- the way it's affecting the market if I was the government.
I would not solve this quickly I would wait until the very end of the year if possible ally -- -- -- people selling their stocks.
And they're taking in all this extra dividends now means in the first quarter.
And I'm tax payments to the government.
Are going to be enormous.
And -- and apparently that's.
What they want down there in Washington.
It's not worth noting though that if you're retired and you're living on dividend paying it payouts.
You're gonna see maybe as much as a 43 point 4% tax -- you know.
That is monsters should you be changing your strategy at this point if you're in that category -- -- to find one pretty Norton narrowly there.
Yeah you know that's a really tough and important question is hard to answer because we don't know yet how it's gonna really.
Play out and if than if they do raise the taxes to that degree -- is possible a lot of companies will.
Low or.
They're dividends or reduce the increases because it's not an efficient use -- -- out of of their capital are so it's it's a difficult question.
Are able election duck that was actually come back there's no doubt and the question -- again -- -- the back.
-- -- will be right.
