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Costco plans special cash dividend of $7 per share

Associated Press Modified: November 28, 2012 at 10:15 am •  Published: November 28, 2012

Investors have paid a maximum 15 percent on dividends since 2003. 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.

Even if a compromise is reached, there's no guarantee that the tax rate for dividends will remain at its current level.

Fitch Ratings said Wednesday it was lowering Costco's issuer default rating one notch to "A+" from "AA-" because the company plans to take on more debt to pay the special dividend. Analyst Philip M. Zahn said "A+" is still considered an above-average, investment-grade rating.

Costco runs 618 warehouses in several countries, including 447 in the United States and Puerto Rico.