Fat "Special Dividends" For Insiders, Institutions, And You, The Individual Investor

(By Rich Bieglmeier) With the end of 2012 just a month away, the much hyped "fiscal cliff" is 31 days away from the edge. Another week or two and rhetorical rocks will tumble over the edge and free-fall into hysteria. Oh, won't the political posturing be so much fun?

This is what's coming, tax hikes on the "rich" in the form of higher income taxes, an Obamacare surcharge, higher capital gains and dividend taxes. Republicans are acting like puppies learning new tricks for a treat. C'mon, roll-over and get a Milk-Bone. Expect to see four paws up, tail wagging, sad, droopy eyes searching for a nod of approval and a pat on the head. Here is the dirty secret, taxes on the "rich" funds about 20 day of a government that spends $188 million an hour, 24/7. Yes, you read that right. And that's if the "rich" don't change their behavior to reduce their 2013 tax bills.

You can bet, money is on the move. For investors, you can see it with the number of companies declaring a special dividend. Companies sitting on mounds of money are returning it to shareholder in one-off events before the close of 2012. It's only prudent for publicly traded companies to dish out cash while it's taxed at 15% when the rate could be as high as 39.6% for some holders after calendar rolls over.

A few of the biggest names that have declared a special dividend and have payable and record dates that will allow investors to participate are AOL Inc. (AOL), Costco Wholesale Corporation (COST), Dillard's Inc. (DDS), and Las Vegas Sands Corp. (LVS) – see table below for record and payable dates.

Special dividends are also a way for insiders to reward themselves with a fat check prior to their tax bills jumping. For example, AOL announced a special dividend of $5.15 per shares. According to the financial records iStock reviewed, CEO Timothy M. Armstrong is in line for a $4.5 million payday. COO Arthur Minson stands to collect $724,816.15.

Insiders aren't the only beneficiaries of the generous payouts. Institutional investors can expect a massive inflow of Benjamins, too.  Money manager Vanguard owns 5,074,627 AOL shares as of September 30, 2012. That equals a truly special dividend of $26.1 million. As we said, money is on the move.

We don't want to single out AOL insiders in these politically charged times for "rich" people. So, for fun, we put together tables (below) with the payouts for insiders at COST, DDS, and LVS to make it "fair."

iStock doesn't want insiders to have all the fun this holiday season. For your convenience, we put this table together of companies paying a special dividend of at least $1 per share and have record dates that allow you to still participate.

iStock expects the trend of special dividends to continue throughout the first half of December. We compiled a list of S&P 500 companies that have Cash + Marketable Securities/ Shares of at least $5 per share. We apologize if some have reported a special dividend already, but believe the list will produce dividends.