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Bond Deals and Dividends

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  • Description

    FBN's Liz MacDonald on special dividends ahead of tax hikes.

  • Duration 2:16
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A growing number of companies during that fiscal cliff these new tax hikes coming -- bar and lots of money to pay out special dividends -- -- -- now costs -- no there isn't nasty and dangerous side effect that investors in companies not be aware of thankfully -- -- -- -- -- I did issue -- -- want your balance sheet with debt to pay -- special dividends those early Christmas presents.

You're gonna get a credit rating cut and that's what the credit rating agencies are warning.

We have about a hundred billion dollar thirty -- in November now the number of companies issuing special dividends in advance of tax hikes.

On dividends coming possibly the fiscal -- a 173 but watch out.

We're seeing cost already getting cut -- -- its credit rating downgraded S&P downgraded brown Foreman there the guys make Jack Daniels.

And -- -- -- vodka you know Booz Allen Hamilton was cut by Moody's in the third quarter.

Carnival as now credit negative at -- all these companies had borrowed.

To issue these special dividends.

And I think -- something really interesting story is costs -- This CEO has been out there saying Americans ought to pay their fair share Americans must sacrifice.

You know is a big supporter of the president.

But he's saving about four million dollars on the special dividend that Costco is issuing.

You know accelerating and into this year and events of the tax hikes.

And you know essentially the board it -- -- sitting about eight million dollars 129 million dollar dividend they're getting early so that this is -- the company is on the radar screen.

Not to -- adjustment is for Vatican out there saying yes Americans pay your fair share and then -- getting an accelerated dividend.

But also the credit -- saying saying wait a second we're taking a hard look at this in terms of your credit rating.

All right thank you having -- -- we're going to be staying on top of this story and I don't think investors or companies or where.

You know minute addition there red flag waved -- you gonna borrow money issue dividends debit -- what.

Breaks have never been lower to borrow and saying that I'd rather borrow and pay low -- I'll get more money returned with a cash believe in my bank account meanwhile give money to my shareholders and I'm in favor of that but will actually had a higher to have to live their rates stay low if -- rating -- cut right.

With a great deal of the rating is cut and incorporate diary I have been I have -- -- -- never been lower because we feel like they're stronger than governor many men are out okay.

Great hit sure.

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