U.S. Tax Withholding Casts Shadow Over Alcoa’s Latest Dividend Payout
Alcoa Corporation has announced a quarterly dividend of USD 0.10 per security, payable on June 6, 2025, with a 30% default U.S. withholding tax applying to non-resident holders unless tax treaty benefits are claimed.
- USD 0.10 ordinary dividend declared for quarter ending March 31, 2025
- Dividend payable June 6, 2025, with ex-date May 19 and record date May 20
- 30% U.S. non-resident withholding tax applies by default
- Shareholders can claim reduced withholding via tax treaty certification
- Payments made primarily by direct credit in multiple currencies
Dividend Announcement Details
Alcoa Corporation (ASX: AAI) has declared an ordinary dividend of USD 0.10 per security for the quarter ending March 31, 2025. The dividend will be paid on June 6, 2025, with the ex-dividend date set for May 19 and the record date on May 20. This announcement aligns with Alcoa’s ongoing commitment to returning value to shareholders through steady dividend payments.
Tax Withholding and Shareholder Implications
The dividend is unfranked and subject to a default 30% U.S. non-resident withholding tax, reflecting Alcoa’s status as a U.S.-based entity. However, shareholders who are tax residents of countries with applicable tax treaties with the U.S. may claim a reduced withholding rate by submitting the appropriate certification before the record date. This mechanism underscores the importance for international investors to engage with the tax certification process to optimise their dividend returns.
Currency and Payment Logistics
Alcoa offers flexibility in dividend payments, defaulting to Australian dollars for holders of CHESS Depositary Interests (CDIs) but allowing shareholders to elect payments in U.S. dollars, New Zealand dollars, or British pounds sterling. Payments will be made primarily via direct credit to bank accounts in Australia, New Zealand, the United States, or the United Kingdom. For shareholders outside these jurisdictions without valid banking instructions, payments will be issued by cheque in Australian dollars, potentially delaying receipt.
Administrative Considerations
Shareholders are encouraged to update their banking details or provide global wire payment instructions promptly to avoid withholding of payments without interest, in line with Alcoa’s mandatory direct credit policy. The company facilitates this process through Computershare’s online portal, ensuring a streamlined experience for investors worldwide.
Looking Ahead
While the AUD equivalent of the dividend will be disclosed closer to the payment date, investors should monitor currency fluctuations and tax treaty certification deadlines closely. This dividend announcement reinforces Alcoa’s steady financial discipline but also highlights the complexities international investors face regarding tax and payment logistics.
Bottom Line?
Alcoa’s steady dividend payout comes with tax and currency nuances that international investors must navigate carefully.
Questions in the middle?
- How many shareholders will successfully claim reduced withholding tax under U.S. treaties?
- What impact will currency fluctuations have on the AUD equivalent dividend received?
- Will Alcoa maintain or adjust its dividend policy amid evolving global tax regulations?
