Dividend Payments Seen Hitting Record in 2012, S&P Says

Thursday, 12 Jan 2012 08:04 AM

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Dividends may break records in 2012, suggesting that U.S. recovery is picking up a faster pace, Standard & Poor's research shows.

Dividends are on track to set a record of more than $252 billion in 2012, according to Standard & Poor's data based on current dividend rates of 394 companies, up from $240.6 billion in 2011 and $205 billion in 2010, The New York Times reports.

"Dividends have been rising strongly," says Binky Chadha, the chief strategist at Deutsche Bank, according to The New York Times. "And the rise that we have seen has plenty of upside."
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Other experts point out that rising dividend payments may lead to overall higher stock prices.

"The idea is beginning to percolate a little bit in management suites that paying a bit higher percentage of your earnings in dividends might be a way to a higher stock price and better benefits for shareholders over all," says Edward F. Keon, portfolio manager for Quantitative Management Associates, the Times adds.

Dividend stocks often become attractive amid times of low interest rates, and the Federal Reserve has said it will keep benchmark lending rates low through at least 2013.

"There's a lot of risk in longer-term bonds. Treasurys will only do well if the world comes to an end," says Rex Macey, chief investment officer with Wilmington Trust in Atlanta, according to CNNMoney.

"You can't buy a 10-year with the yield at 2 percent and expect a real return. Quality dividend stocks are bargains compared to Treasurys."

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