Dividend Battle May Force Consensus - Utilities benefit from current low rate

August 20, 2012 15:30 by Bill Conway in Accounting & Tax, Regulation  //  Tags:   //   Comments (0)

The outcome of the battle over tax reform and the resolution of the expiring tax cuts could impact how investor owned utilities secure future financing.  The timing of this potential change is not ideal, as utilities are incurring higher cost to develop and build infrastructure, in addition to complying with environmental and regulatory mandates.  As referenced in the article, utility stocks are historically known for above average dividend yields, creating a more efficient debt and equity or balanced capital structure for public utilities.  However, raising the capital gains tax rate on dividend paying stocks could reduce investor appeal, thus reducing a utilities ability to issue new shares and increasing the reliance on debt to fund future projects and expansion opportunities.   To learn more, click here.


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