This story was printed on Business Insider earlier this morning.
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Costco is just the latest of a slew of companies to dump cash on its shareholders in the form of a special one-time dividend.
And with the prospect of higher dividend taxes next year, many more companies are likely to follow.
So, how do you know if a company is going to pay up?
Obviously, the company will have the financial flexibility and the excess cash to do so.
But there's another characteristic that stood out in 2010, which was the last time dividend taxes were expected to surge by year-end.
"Interestingly, many companies declaring specials also exhibited high levels of insider ownership," wrote Markit in a report earlier this month. "While executive and director holdings ranged from < 1% to as high as 87%, more than half (53%) of companies exhibited insider ownership exceeding 25% of shares. Average insider holdings were 30% among the 50 companies."
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Costco is just the latest of a slew of companies to dump cash on its shareholders in the form of a special one-time dividend.
And with the prospect of higher dividend taxes next year, many more companies are likely to follow.
So, how do you know if a company is going to pay up?
Obviously, the company will have the financial flexibility and the excess cash to do so.
But there's another characteristic that stood out in 2010, which was the last time dividend taxes were expected to surge by year-end.
"Interestingly, many companies declaring specials also exhibited high levels of insider ownership," wrote Markit in a report earlier this month. "While executive and director holdings ranged from < 1% to as high as 87%, more than half (53%) of companies exhibited insider ownership exceeding 25% of shares. Average insider holdings were 30% among the 50 companies."
That got me thinking, who is next? In an attempt to answer that, I ran a screen for Russell 3000 companies with high insider ownership rates, total debt to cap less than 70%, high Altman Z-scores, and companies generating ample free cash flow. In addition, I also weeded out those companies with market caps under $1 billion and attempted to exclude any company that has already announced a one-time dividend. The following table lists the top 50 names (ranked by free cash flow generation relative to sales) making this criteria.
| Company Name | Ticker |
| Oracle Corporation (NasdaqGS:ORCL) | ORCL |
| Ubiquiti Networks, Inc. (NasdaqGS:UBNT) | UBNT |
| Federated Investors, Inc. (NYSE:FII) | FII |
| Brown & Brown Inc. (NYSE:BRO) | BRO |
| Google Inc. (NasdaqGS:GOOG) | GOOG |
| Stryker Corporation (NYSE:SYK) | SYK |
| Liberty Media Corporation (NasdaqGS:LMCA) | LMCA |
| Akorn, Inc. (NasdaqGS:AKRX) | AKRX |
| Nordson Corporation (NasdaqGS:NDSN) | NDSN |
| 3D Systems Corp. (NYSE:DDD) | DDD |
| NetScout Systems, Inc. (NasdaqGS:NTCT) | NTCT |
| Michael Kors Holdings Ltd. (NYSE:KORS) | KORS |
| Cerner Corporation (NasdaqGS:CERN) | CERN |
| Danaher Corp. (NYSE:DHR) | DHR |
| Liquidity Services, Inc. (NasdaqGS:LQDT) | LQDT |
| Air Methods Corp. (NasdaqGS:AIRM) | AIRM |
| eBay Inc. (NasdaqGS:EBAY) | EBAY |
| Apollo Group Inc. (NasdaqGS:APOL) | APOL |
| First Cash Financial Services Inc. (NasdaqGS:FCFS) | FCFS |
| MSC Industrial Direct Co. Inc. (NYSE:MSM) | MSM |
| IHS Inc. (NYSE:IHS) | IHS |
| Fossil, Inc. (NasdaqGS:FOSL) | FOSL |
| Hasbro Inc. (NasdaqGS:HAS) | HAS |
| Ralph Lauren Corporation (NYSE:RL) | RL |
| Vera Bradley, Inc. (NasdaqGS:VRA) | VRA |
| Brady Corp. (NYSE:BRC) | BRC |
| II-VI Incorporated (NasdaqGS:IIVI) | IIVI |
| Nu Skin Enterprises Inc. (NYSE:NUS) | NUS |
| The Estée Lauder Companies Inc. (NYSE:EL) | EL |
| Cintas Corporation (NasdaqGS:CTAS) | CTAS |
| Titanium Metals Corporation (NYSE:TIE) | TIE |
| Tootsie Roll Industries Inc. (NYSE:TR) | TR |
| Franklin Electric Co. Inc. (NasdaqGS:FELE) | FELE |
| Broadcom Corp. (NasdaqGS:BRCM) | BRCM |
| Simpson Manufacturing Co., Inc. (NYSE:SSD) | SSD |
| Leucadia National Corp. (NYSE:LUK) | LUK |
| Mine Safety Appliances Co. (NYSE:MSA) | MSA |
| W.W. Grainger, Inc. (NYSE:GWW) | GWW |
| Guess? Inc. (NYSE:GES) | GES |
| Nike Inc. (NYSE:NKE) | NKE |
| UniFirst Corp. (NYSE:UNF) | UNF |
| Watts Water Technologies, Inc. (NYSE:WTS) | WTS |
| Airgas, Inc. (NYSE:ARG) | ARG |
| DST Systems Inc. (NYSE:DST) | DST |
| Boston Beer Co. Inc. (NYSE:SAM) | SAM |
| Molex Incorporated (NasdaqGS:MOLX) | MOLX |
| Bruker Corporation (NasdaqGS:BRKR) | BRKR |
| Nordstrom Inc. (NYSE:JWN) | JWN |
| Under Armour, Inc. (NYSE:UA) | UA |
| AO Smith Corp. (NYSE:AOS) | AOS |
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