Can One-Time Dividends Work?

There are often times when a one-time dividend might be paid to investors. These are dividends that are paid in special instances when a business has a large amount of money coming in. Sometimes it might happen when a business makes a sale or a litigation case is successful. There are many good reasons why a business might offer one of these dividends; trying to determine when such a dividend would be paid is another story.

There are even cases where a business demands dividends to be paid suddenly as a means of adjusting the overall tax profile of the business. A company might need to add extra funds to the investors to ensure that the business does not have to pay as much in taxes. Not all businesses are going to offer these dividends. You can review the histories of dividend payments for each dividend stock you look at to see if any one-time payments were made. You should also look for information on why those dividends were paid.

Here are a few examples of how one-time dividend payments have been used in the past:

• In 2012, Carnival Cruise Lines offered a $1 dividend in lieu of the regular 50 cent dividend offered by the stock. This was used by CCL to reduce the overall tax burden of the coming year.
• Franklin Resources typically offers dividends of 66 cents per share, but that total went up to $1 per share on a few occasions since 2005. These were also used to manage the tax burdens of the company.
• In 2012, the Las Vegas Sands group paid a dividend of $2.75 per share, a total much greater than the 20 cents per share that the Sands offered. However, the Sands did not offer much information on why the payout was given other than that the company was in a strong position for making more money.

These are all instances of how a one-off payment may be dramatically better the normal dividend. You would have to determine if there is a good rationale for why it was paid. More importantly, you should never assume that a one-time payment would happen again or anytime soon. There is no guarantee that such a payment will occur. The Franklin Resources example as that company had only paid out four of those special dividend payments in the years 2005 to 2017.