Diary of a Dividend Diva: LTD, PAYX, AMTD, MO, PM

 | Dec 14, 2012 | 9:00 AM EST  | Comments
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ltd

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payx

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amtd

As we race toward the fiscal cliff, the dividends are coming fast and furious, so we need another installment of the Diary to keep you abreast of coming opportunities. The last trading week before Christmas is now upon us, so we will probably hit a zenith of dividends. Any company that has not declared now will be unlikely to sneak one in before year-end. So peruse the table below and pick off the final dividends you want to see under your tree this year.

Year-End Dividends
Source: FactSet

Joining the list is one of my all-time favorites, the dividend champion Limited (LTD). Limited pays a regular dividend, and throws in specials on a regular basis. They didn't disappoint this season, declaring a special that is 6% and will go ex-dividend on Dec. 18. Paychex (PAYX) is another Diva favorite -- I play it every quarter -- that will pay an unusually high 2%, also going ex- on Dec. 18. I also like the TD Ameritrade (AMTD) dividend of 3%, set to go ex- on Dec. 19.

As you examine the table, pay attention to the pay date. The names above are very shareholder-friendly, going ex-dividend and paying the dividend in 2012, thus qualifying it for the low tax rate. Below the yellow line are dividends you'd accrue this month, but because they will not pay until 2013, you'd pay tax at the new 2013 rates. The top of the table are the nice kids that will get gifts under the tree; the ones at the bottom are the naughties that could have accelerated the payment but decided not to do so. Shame on them! 

Of course, life goes on, so come Jan. 1 we will be back to rotating through dividends with no thought to the tax implications. As I noted in an earlier post, dividend rotation is tax-indifferent anyway -- we always pay the highest rate -- but from 2013 on, the buy-and-hold will have no tax advantage, so dividend rotation will become even more attractive!

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