SAN FRANCISCO (AP) — First Republic Bank said its board has declared a fourth-quarter dividend of 10 cents per share and plans to pay it earlier than usual, a move many companies are taking ahead of potential tax increases on dividends paid 1n 2013.
If the White House and Republican congressional leaders can't strike a deal on taxes and spending cuts, tax rates on dividend income will rise. That's prompted many companies to review their policies on payouts for shareholders, setting special one-time payments in December or moving up payments originally slated for 2013 to this year.
First Republic Bank said Tuesday that the fourth-quarter dividend will be paid on Dec. 28 to shareholders of record on Dec. 17. It is the latest company to move up the payment of its quarterly dividend to protect investors from potentially having to pay higher taxes on dividend income starting in January.
Many companies are reviewing their dividend policies now that it appears investors could soon pay higher taxes. Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4 percent.
Shares of First Republic Bank, based in San Francisco, dropped 52 cents, or 1.6 percent, to $32.97 in afternoon trading.