As Fiscal Cliff Looms, Dillard's Awards $5 Per Share Dividend

Dillard's Inc. of Little Rock announced Monday that its shareholders will receive a special, one-time cash dividend of $5 per share before the end of the year, which would allow investors to sidestep higher taxes if fiscal cliff tax hikes go into effect.

The news drove the department store chain's stock (NYSE: DDS%) up 2.51 percent early Tuesday to $88 a share, an all-time high for the retail chain. Shares closed at $85.84 on Monday.

Other companies, including discount retailer Wal-Mart Stores Inc. of Bentonville, have announced similar moves with their dividends. If the Budget Control Act of 2011, or so-called "fiscal cliff," goes into place on Jan. 1., it would increase the tax rate on dividends, which stands at 15 percent.

Dillard's spokeswoman Julie Bull said the $5 dividend was the highest in the company's history. She declined to comment on the whether the dividend was related to the "fiscal cliff."

But Dillard's CEO William Dillard II said in a news release that the $5 per share dividend "reflects our strong financial position and underscores our confidence in Dillard's. We are pleased to return value to our shareholders in this manner."

The Dillard's board of directors also said shareholders of record will receive the regular, quarterly cash dividend of 5 cents per share, according to a Dillard's news release.

The dividends are for both the Class A and Class B shareholders of record as of Dec. 7. The dividends will be paid on Dec. 21.

The special dividend will amount to more than $35 million for members of the Dillard family, who own more than 7 million shares of company.  

Wal-Mart said it would move up the payment date of the company’s regular quarterly shareholder dividend of about 40 cents per share to Dec. 27. It had been scheduled for Jan. 2.

Wal-Mart’s board "recognized that there are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks, despite the ongoing good faith negotiations between the administration and Congress to resolve details related to the fiscal cliff," Wal-Mart said in a statement Tuesday to Arkansas Business. "In light of this uncertainty, the Board determined that moving our dividend payment up by a few days to 2012 was in the best interests of our shareholders."