Larry Ellison and Oracle One-Up Everyone with a December Triple Dividend

Larry EllisonA lot of companies have been moving up dividends that are typically paid out in early January to late December, but the reason why is entirely due to what comes around in April: taxes.

With tax rates on qualified dividends set to nearly triple for some high earners come 2013, companies are making sure that longtime shareholders are treated to today's generous cap at 15%.

Some companies have been doing more than simply moving up January payouts to events that will payable later this month. Dozens of publicly traded companies have declared meaty one-time dividends. You also have some companies that are trying to accelerate the following quarter's distribution, cutting investors checks for the next two scheduled quarterly dividends now.

Oh, and then you have Oracle (ORCL).

Anything You Can Do, Larry Ellison Can Do Better

The leading enterprise software company announced on Monday afternoon that it will issue its next three quarterly dividends -- each for $0.06 a share -- as a single $0.18 a share dividend that will go out on Dec. 21.

Anyone who knows much about Oracle CEO Larry Ellison knows that the competitive corporate leader loves to one up everybody else.

This is the same guy that sent an ice cream truck to a fierce rival, offering employees free ice cream sandwiches as a programmer headhunting tool. The inscription on the wrappers read:

Summer is near.
Oracle is here.
To brighten your day and your career.

Income Investors Better Learn to Budget

Most investors won't mind the deluge of accelerated dividends they're getting from Oracle and other companies that are moving up their future distributions. However, retirees and other shareholders who rely on the steady flow of dividend income will have to remember to save some of that largesse for a rainy day.

Inasmuch as it's sending out its payouts for its fiscal second, third, and fourth quarter at the same time, Oracle investors aren't likely to see another dividend check until the latter half of next year.

To be fair, Oracle isn't exactly a magnet for income investors. The stock's four modest quarterly payouts add up to a yield of only 0.7%. However, as companies with chunkier rates follow Oracle into lumping more of 2013's distributions into what little time is left of 2012, yield chasers will need to be careful here.

It's raining dividends now, but only because it will be dry come early next year.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks. The Motley Fool owns shares of Oracle.

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Just makes me sick that a huge majority of our fellow Americans voted for Obama, thus Obamacare and his many new taxes. I wish I could say it serves you right, but I have to pay as well and I voted for a better economy and a balanced budget.

December 05 2012 at 12:26 PM Report abuse rate up rate down Reply

Just as predicted, Companys pay extra dividends in 2012 to skirt the pending the tax increase coming january 1 2013. So this means less tax coming in from the tax increase in 2013.

December 04 2012 at 3:43 PM Report abuse +3 rate up rate down Reply
1 reply to unced's comment

You hit it right on the head. And, from the paucity of comments, we can see that most people have no clue of what is awaiting them with Obamacare. Through Obamacare, everyone with a job will have their taxes increased - payroll and income taxes. Those on welfare will continue to collect $1500/mo in welfare; $800/mo rent money; $700/mo food stamps; Obama-phone with 200 minutes/month - all tax free. They won't have to pay any Obama fees because they are too poor, so you and I will continue to pay for them, too. Additionall, The U.S. Internal Revenue Service has released new rules for investment income taxes on capital gains and dividends earned by high-income individuals that passed Congress as part of the 2010 healthcare reform law.
The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.
The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.
The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.
The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.
Released late on 11/30/12, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.
Both sets of rules will be published on 12/5/12 in the Federal Register.
The proposed rules are effective starting Jan. 1. Before making the rules final, the IRS will take public comments and hold hearings in April.

This also encompasses the sale of a home. Notice how high income earners are now $200K for singles and $250K for couples, but it still get small business operators because the vast majority file as individuals and not as a business.

December 05 2012 at 7:56 AM Report abuse rate up rate down Reply