Sirius will pay special dividend, buy back shares

• Sirius XM Radio will pay a dividend of 5 cents per share
• It will also buy back up to $2 billion of its stock to boost share value
• The stock's 52-week high is $2.97 per share

NEW YORK (AP) — Sirius XM Radio (SIRI) announced Thursday that it will issue a special dividend before the end of the year and has plans to buy back up to $2 billion of its shares.

The radio broadcast company says its special dividend of 5 cents per common share is payable Dec. 28 to shareholders of record as of Dec. 18. The cash dividend is expected to cost approximately $325 million.

Sirius said its share repurchase program will take place in both the open market and in privately negotiated transactions. Liberty Media Corp., which owns nearly half the company's stock, will participate in the repurchases on a pro-rata basis, so its relative ownership interest will not be affected.

Sirius said the plans reflect its desire to return value to shareholders and confidence in its long-term growth prospects.

Sirius is the latest company to move up its quarterly payout or issue a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income next year.

Since 2003 investors have paid a maximum 15% on dividend income. But that historically low rate will expire in January unless Congress and President Obama reach a compromise on taxes and government spending.

As it stands, dividends will be taxed as ordinary income in 2013, same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4%.

Sirius shares are near the high end of their 52-week range of $1.70 to $2.97.