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Dividends Rise, Tax Hikes May Follow


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Starbucks, GE, and others are boosting dividends, but it’s up to Congress to decide how much dividend income shareholders will keep.

U.S. shareholders are seeing companies boost dividends again, after two years of sharp declines in payouts. However, at the same time, taxes on their dividends could be heading higher, taking a bite out of shareholders’ income and potentially hurting the performance of dividend-paying stocks.

So far in 2010, 10 companies in the large-cap Standard & Poor’s 500-stock index that hadn’t been paying dividends started doing so, according to Standard & Poor’s. Another 146 increased their quarterly payout. Just one company—Valero Energy (VLO)—has lowered its dividend, and another, refiner Tesoro (TSO), canceled it altogether.

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