CapitalSource issues special dividend in December

LOS ANGELES (AP) -- CapitalSource Inc. said Monday that it will issue a special dividend to shareholders this month, one of many companies to do so this year as tax rates on investors are scheduled to rise in 2013.

The one-time dividend is payable Dec. 26, along with its regular quarterly cash payment of 1 cent. Combined, the dividend payments will cost the company $106 million.

Many companies are moving up quarterly payments to the end of 2012 from early 2013, or issuing a special end-of-year dividend, to protect investors from potentially having to pay higher taxes on dividend income starting in January.

Since 2003 investors have paid a maximum 15 percent on dividend income. But that historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, 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 would jump to 43.4 percent.

The commercial lender, which is headquartered in Los Angeles, will use some of the $250 million that had been slated for its stock buyback program to pay the special dividend.

CapitalSource also said Monday that it made roughly $600 million of loans during the quarter, or more than $2.3 billion for the year. The company had expected $2.2 billion in loans for all of 2012.

Shares slipped 12 cents, or 1.5 percent, to $7.80 by early afternoon. Its stock remains at the high end of its 52-week trading range of $5.96 to $8.15 per share.