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Costco to spend $3 billion on special $7 dividend

Associated Press Modified: November 28, 2012 at 6:15 pm •  Published: November 28, 2012

Costco's shares rose $6.07, or 6.3 percent, to close at $102.58 Wednesday, having earlier risen as high as $102.62. The stock has climbed from a low of $78.81 in early January to peak last month at $104.43.

Investors have paid a maximum 15 percent on dividends since 2003. But that historically low rate is set to expire in January. 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 political compromise is reached, there's no guarantee that the tax rate for dividends will remain at its current level.

Fitch Ratings said Wednesday it has lowered 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.