Stocks With Sizable Dividend Hikes

The current 15% cap on the dividend tax rate, enacted in 2003, expires at the end of this year. Without an extension, dividends will revert to being taxed as ordinary income, with rates scheduled to top out at 39.6% next year. Expect an extension at least through next year, wrote SmartMoney.com tax columnist Bill Bischoff last week (although he acknowledged his prediction might be too optimistic).

The large American companies that make up the S&P 500 index do not seem to be bracing for an environment in which dividends are less of a draw. They devoted $5.1 billion more to dividends in the third quarter, according to Standard & Poor's. Payment increases numbered 299, up from 191 a year earlier. The number of payment cuts shrank to 35 from 135.

Source: SmartMoney

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