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How to Divine Who's Paying Special Dividend Next

The special-dividend bandwagon is rolling alongside "fiscal cliff" negotiations, and one expert told CNBC's "Squawk on the Street" there are strategies to predict which companies may jump aboard as well as pitfalls to avoid.

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Doug Sandler, co-founder and chief equity strategist with RiverFront Investment Group, said companies see the writing on the wall — that dividend taxes are likely to rise in most fiscal cliff compromise scenarios — and are paying out special dividends to get ahead of that news.

Recent companies paying out special dividends include Wal-Mart, Ethan Allen, Las Vegas Sands, Brown Forman and Dillard's.

Sandler said the uncertainty surrounding fiscal cliff negotiations between Congress and the White House will prompt more companies to consider special dividends, and as those companies are rewarded by the market for putting shareholders first, "It will encourage other companies to do the same," he said.

He said look for companies with high insider or family ownership and the capacity to pay higher dividends, giving Nordstrom as an example. He warned that utilities and telecoms that already pay high dividends likely don't have the excess capacity to pay more.

And for investors who like this trend, he said, there are also dividend-based ETFs.

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