Executives are delaying new contracts and investment decisions due to “the pending fiscal cliff, potential tax reform and other policy changes that may take place,” Shammo said in a call with analysts on Oct. 18 from New York.
The rate on dividends for high-income taxpayers may rise next year to 43.4 percent from 15 percent. More than 140 companies in the Russell 3000 Index, which represents about 98 percent of the U.S. equity market, have declared $18.7 billion worth of special dividends since Sept. 1, according to Bloomberg data. The payouts are more than three times the average market value of companies in the gauge, data show.
While distributions show corporate leaders are confident enough to pay out some of their cash, it also signals they’re not optimistic enough to invest in larger projects, according to Malcolm Polley, who manages $1.1 billion as chief investment officer at Stewart Capital Advisors LLC in Indiana, Pennsylvania.
“You have a lot of companies holding off spending,” Polley said in a Dec. 13 phone interview. “There’s a real risk that capex across the board declines in 2013.”