One way to cushion the shareholders’ presumed fall of the fiscal cliff is to distribute some cash now, before the tax on dividends jumps. Westlake Chemical Corp. (NYSE: WLK) is the latest participant in what could be a large field. Wynn Resorts Ltd. (NASDAQ: WYNN), for example, distributed $8 a share in cash late last month, and Westlake will pay out $3.75 in cash on December 12, to shareholders of record on November 26.
The special dividend supplements the company’s regular quarterly dividend of $0.1875 a share, and the company said the added dividend will distribute $250 million above the regular dividend cost of about $12.5 million. All dividend payments will be made from cash on hand.
Westlake’s CEO said:
We continually work toward delivering shareholder value and we are pleased that the strength of our business and our financial performance provides the opportunity to pay this special dividend. Beginning in the first quarter of 2013 and continuing through 2015, we will complete our previously announced integration projects that will contribute to our earnings and continue our commitment of profitable growth for our shareholders.
Earlier this month the company posted an all-time high share price of just over $80. But that did not stop several analysts from downgrading the stock, saying it was fully valued. Westlake had $1.2 billion in cash and equivalents at the end of the third quarter.
The $250 million the company is paying out is about equal to Westlake’s free cash flow in the first nine months of the year. That is pretty impressive. And the company is expanding, with new capacity scheduled to come online next year. And as long as natural gas and oil prices remain reasonably low, Westlake’s prospects look good for the medium term.
Shares are inactive in premarket trading this morning, having closed at $72.43 on Friday. The 52-week range is $37.68 to $80.49. The consensus target price on the stock is around $70.36, with the high target at $85 a share.