The 10 Largest Fiscal Cliff Dividend Tax Winners

Dec. 19, 2012 — -- intro:While Congress and the White House negotiate a mix of tax increases and budget cuts, many firms decided to pay shareholders an early or special dividend ahead of an anticipated increase in the dividend tax rate. Not surprisingly, the largest individual shareholders of these companies often sit on the board of directors, reaping millions of dollars in tax savings.

Wealth-X, an information research firm of ultra high-net worth individuals worth over $30 million, compiled a list of the ten largest special dividend-paying companies based in the U.S. this year as of Dec. 12 and the tax savings their largest individual shareholders are receiving ahead of the fiscal cliff.

All ten individuals, led by Sheldon Adelson, chairman and CEO of the Las Vegas Sands, either sit on the board of directors, are senior executive directors, chairmen or CEOs of the listed companies.

In the fourth quarter, the total dividends received by these shareholders exceeded $2.1 billion, which is $602 million more than what they would receive should tax rates increase.

Josh Peters, editor of DividendInvestor, published by the investment firm Morningstar, said companies that make regular dividend payments provide more value than special dividend payments to the average shareholder, who can then rely on a regular stream of income.

"If you're a founder of a big company, or chairman, it means a lot to you, but I'm pretty skeptical that there was any real enduring value in these special dividends beyond the payments themselves," Peters said.

The combined wealth of the shareholders on the list is $110.4 billion, representing one fifth of the combined market capitalization of the top 10 largest dividend-paying companies.

Compensating highly-paid employees through capital gains, such as stock holdings, is often favored among the wealthy because it is lower than the top statutory rate on ordinary income, which is 35 percent. One form of rewarding shareholders is through a cash dividend paid periodically. The dividend tax rate is currently at 15 percent but the president has proposed increasing it to upwards of 43.4 percent starting in 2013 to plug the ballooning trillion-dollar budget deficit.

Read more: What You Should Know About the Capital Gains Tax

The dividends received by the shareholders on the list represent 15 percent of the more than $14 billion payout by the top 10 companies. The largest shareholder of each company is listed with their dividend payout:

quicklist:category: $1.2 billiontitle: Sheldon Adelson, Las Vegas Sandsmedia: 18005807 text:Sheldon Adelson, chairman and CEO of the Las Vegas Sands resort group, who has an estimated net worth of $23.2 billion, is receiving about $1.2 billion based on $2.75 a share special cash dividend on its common stock payable on Tuesday.

The Fortune 500 company announced the dividend on Nov. 26 for shareholders of record on Dec. 10.

Adelson said returning money to shareholders and growing the annual dividend, which the company raised to $1.40 per share beginning in 2013, are the firm's priorities.

"The cash flow of our current operations and the strength of our balance sheet have put us in the enviable position of both returning capital to our shareholders while at the same time staying true to our roots as a growth company," Adelson said in a statement at the time.

Wealth-X estimates that Adelson saved $331 million in taxes, based on the difference between the scheduled 43.4 percent federal dividend tax rate, which includes the 3.8 percent Affordable Care Act tax and the maximum capital gain tax of 39.6 percent, and the current dividend tax rate of 15 percent.

Read more: What Happens If the Bush Tax Cuts Expire?

quicklist:category: $497 million title: Thomas Frist III, HCAmedia: 18005573 text:

Thomas Frist III, who sits on the board of directors of HCA Holdings, will receive $497 million from the hospital operator based on the special cash dividend of $2 a share it announced on Dec. 6 to shareholders as of Monday.

After the payment date of Dec. 21, Frist's estimated dividend tax savings are $141 million. He has an estimated net worth of $2 billion.

"That aggregate number is more likely to represent a group of entities and individuals including Thomas Frist III, his family and other investors and not him individually," a company spokesman said.

HCA "considered a number of factors, including the cost of debt and other market conditions. Potential tax implications was just one of several considerations," the spokesman added.

quicklist:category: $200 milliontitle: Lawrence Ellison, Oracle media: 18005707text: Larry Ellison, CEO of Oracle Corp. and the wealthiest person in California, will receive about $200 million after the software company announced on Dec. 3 an "accelerated" cash dividend for its second, third and fourth quarters. The company is paying 18 cents a share on Dec. 21 to its shareholders as of Dec. 14.

He has a net worth of about $41 billion, according to Wealth-X.

Read more: The Richest Person in Each State

quicklist:category: $105 milliontitle: Charles Johnson, Franklin Resourcesmedia: 18005505text:

Charles Johnson, chairman of the investment company, Franklin Resources, is receiving about $105 million after the company announced a special cash dividend on Nov. 16 of $3 per share. The company also announced a quarterly dividend of 29 cents a share.

Johnson, who has a net worth of about $5.2 billion, will save about $30 million in taxes.

Peters said it was not unusual for the company to pay a special dividend, but the anticipated tax change likely affected the payment timing.

The company has raised its dividend every year since 1981, according to its website.

quicklist:category: $75 milliontitle: Stephen Wynn, Wynn Resortsmedia: 18005665 text:

Stephen Wynn, chairman and CEO of Wynn Resorts with a net worth of $2.5 billion, is receiving about $75 million in dividend payments, saving about $21 million in taxes, according to Wealth-X.

The hotel company declared a special dividend of $7.50 a share in October that was payable on Nov. 20 to shareholders as of Nov. 7.

quicklist:category: $29 milliontitle: Vincent Ryan, Iron Mountainmedia: 18005593text:

Vincent Ryan, who sits on the board of directors of the real estate company, Iron Mountain Inc., is earning about $29 million from special dividends of about $4.07 a share.

Peters said the firm's dividend likely has more to do with its tax-status as a REIT rather than an anticipated increase in the dividend tax rate.

A company spokesman referred ABC News to the announcement about the special dividend on Oct. 11, which was related to its conversion into a real estate investment trust (REIT) from a corporation.

Still, Ryan, who is worth about $540 million, is getting a tax savings of about $8 million, according to Wealth-X.

quicklist:category: $27 milliontitle: Russell Wight Jr., Alexander'smedia: 18005655text:

Russel Wight, Jr., philanthropist and a member of the board of directors of real estate investment trust Alexander's, is earning about $27 million in dividend payments, with a tax savings of $7 million. Wight, Jr. is worth about $840 million.

The company, based in Paramus, N.J., announced on Nov. 30 a special long-term capital gain dividend of $122 a share, payable on Dec. 20 to stockholders as of Dec. 10.

quicklist:category: $14 milliontitle: James Sinegal, Costco media: 18005754text:

James Sinegal, former Costco CEO, now a member of the board of directors, is earning about $14 million in special dividend payments, for a tax savings of $4 million. Sinegal has a net worth of about $280 million.

The company announced on Nov. 28 that it was paying a special dividend of $7 a share. The company made headlines also because it borrowed the bulk of the money to pay the dividend.

Peters said the announcement was "totally out of character" for the wholesale company, which pays an ordinary dividend of just over $1 a share annually.

"The return of cash was clearly motivated by the possibility of a tax increase," Peters said.

At the time, Richard Galanti, the company's CFO said the move was the firm's "latest effort in returning capital to our shareholders while maintaining our conservative capital structure."

"Our strong balance sheet and favorable access to the credit markets allow us to provide shareholders with this dividend, while also preserving financial and operational flexibility to grow our business globally; allowing for ongoing dividend and share repurchase activities; and enhancing the value of the Costco membership to the more than 67 million Costco cardholders throughout the world," he said in a statement then.

quicklist:category: $10 million title: Cornwell Appleby, Booz Allen Hamiltonmedia: 18005543text:

Cornwell Appleby, a senior executive advisor to the consulting firm Booz Allen Hamilton who is worth about $55 million according to Wealth-X, is making about $10 million in special dividend payments, for tax savings of $3 million.

The company, based in McLean, Va., announced in August a special dividend of $6.50 a share.

quicklist:category: $4 million title: James Walton, Walmart media: 18005675 text:

On Nov. 19, Walmart announced a change in its fourth quarter dividend payment date, saying it would be paid on Dec. 27 instead of Jan. 2.

The company said the majority of its 16 member board of directors is independent.

"The three family members who are on Walmart's board – Rob Walton, Jim Walton and Gregory Penner, recused themselves from the discussion of and the vote on the decision regarding the payment date change," Walmart said in a statement at the time.

Jim Walton, the company's largest individual shareholder who is worth $34.8 billion, is earning $4 million for the special dividend. He is saving about $1 million in taxes.

"Walmart's Board recognized that there are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks, despite the ongoing good faith negotiations between the administration and Congress to resolve details related to the fiscal cliff," the company statement read. "In light of this uncertainty, the Board determined that moving our dividend payment up by a few days to 2012 was in the best interests of our shareholders."