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Costco to spend $3 billion on special dividend

Associated Press Published: November 28, 2012

Several Costco warehouses were closed during part of the month due to power outages following Superstorm Sandy. The company estimated that the storm trimmed 0.5 percent from sales of stores open at least a year. That is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

Costco's shares rose $6.07, or 6.3 percent, to close at $102.58 on Wednesday. The stock has climbed from a low of $78.81 in early January to a 52-week peak of $104.43 last month.

Investors have paid a maximum 15 percent tax rate 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 could 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 that it lowered Costco's issuer default rating one notch to "A+" from "AA-" because of the debt the company is taking on. 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 U.S. and Puerto Rico.