Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Join the Dividend Payout Party With These Stocks

Companies / Dividends Mar 14, 2013 - 05:32 PM GMT

By: Money_Morning

Companies

Ben Gersten writes: It's been a great year for anyone interested in dividend stocks - and it looks like it'll get even better.

Corporations in the S&P 500 are expected to pay at least $300 billion in dividends in 2013, up from last year's $282 billion, according to S&P Dow Jones Indices.


And some of the dividend hikes represent a healthy payout boost.

For example, one of the latest in a string of companies to boost dividends, QUALCOMM Inc. (Nasdaq: QCOM), recently announced a 40% increase in its dividend.

Besides QUALCOMM, Hess Corp. (NYSE: HES) hiked its dividend 150%, HollyFrontier Corp. (NYSE: HFC) 50%, The Home Depot Inc. (NYSE: HD) 34%, The TJX Cos. Inc. (NYSE: TJX) 26% and Applied Materials Inc. (Nasdaq: AMAT) 11%, to name just a handful.

The good news: If you haven't yet joined the payout party, you can expect even more dividend increases in the weeks ahead.

Why Dividend Increases Dominate in 2013
The payouts come as companies tap into a cash hoard they have built up the past few years. U.S. companies have a record $2 trillion-plus in cash on hand.

"Corporations are flush with cash, and that cash sitting in the corporate coffers is earning next to nothing," Rob Leiphart, an analyst at Westport, CT-based market research firm Birinyi Associates Inc., told The Wall Street Journal. "Companies have to do something with it."

They've accumulated their large cash piles in part by cutting expenses and taking advantage of low interest rates to borrow funds.

Companies also are willing to increase payouts because of improved confidence in the economy at a time when the Dow has hit record levels and unemployment just fell to a four-year low of 7.7%.

"The increases in dividends could be a sign of normalization in the economy; a lot of the increases are restoring dividends to the pre-2008 level," says Money Morning Global Investing Strategist Martin Hutchinson.

Why to Be Investing in Dividend Stocks
Dividends are how investors get the most return for their money. It's estimated dividends and reinvestment of dividends can account for 85%-90% of total stock market returns.

Dividend stocks also tend to outperform non-dividend payers in bull and bear markets, as this data shows...

According to a Ned Davis Research study that measured performance from 1972-2011, dividend stock returns averaged 20.8% in bull markets compared with 17.4% for non-dividend stocks. In bear markets, dividend payers fell 13.5%, compared with a 26.1% plunge for non-dividend payers.

And dividend-paying stocks are more attractive to investors than savings accounts and Treasury notes, which have much lower yields.

But investors need to be careful: Not all dividend stocks are created equal.

Some companies spend too much money on stock buybacks in relation to dividend payouts. Stock buybacks can be a big negative, according to Hutchinson.

"The truth is buybacks are positively damaging to the interests of ordinary shareholders," Hutchinson said. "Buybacks endanger the dividend because they increase the chance of running out of money in a downturn."

Buybacks manipulate earnings and can make a company appear to be growing when it's not. Plus, management tends to favor buybacks over dividends when given the choice. That's because managers have ownership largely in the form of stock options - those shares receive no dividends.

Critics think stock buyback money should instead be reinvested in the company.

Finding the Best Dividend Stocks
To pick the best dividend stocks, investors should focus on companies that can sustain their dividend payouts and have a history of increasing them.

Hutchinson's favorite way to play dividend-paying stocks is through what he calls "heirloom stocks."

These are companies that have not only maintained dividends, but have increased dividends every year for at least 30 years.

One example is The Procter & Gamble Co. (NYSE: PG), which has raised dividends every year since 1954 and yields 2.91%.

A couple other solid dividend stocks to invest in are ABB Ltd. (NYSE ADR: ABB) and Altria Group Inc. (NYSE: MO).

ABB entered the NYSE in 2001 and is on its way to becoming an heirloom stock. It is a global leader in power and automation technologies and yields 3.16%.

Altria is a holding company involved in the tobacco industry whose subsidiaries include Philip Morris. It has raised its dividend 46 times in the past 43 years and yields 5.15%.

Source :http://moneymorning.com/2013/03/12/these-dividend-stocks-will-continue-to-shine-in-2013/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in