Big companies are increasing their dividend payments, as their earnings improve and the economy recovers.
So far this year, 156 corporations in the Standard & Poor’s 500 Index have either raised or initiated dividends payments, while only two have cut or eliminated their dividends, Bloomberg reports.
Starbucks started a dividend this spring and boosted it 30 percent in July. Also last month, Cummins raised its dividend 50 percent, General Electric by 20 percent and Walgreen Co. by 27 percent.
"We've had companies bump up their dividends, as management teams gain confidence in the outlook," John Buckingham, chief investment officer at Al Frank Asset Management, told Bloomberg.
Analysts at Bloomberg estimate that another 20 companies in the S&P 500 will lift their dividends by Sept. 30, including Microsoft and News Corp.
"We've got a way to go here," Henry Sanders, manager of the Aston/River Road Dividend All Cap Value Fund, told Bloomberg.
To be sure, the $12.4 billion gain in dividend payouts so far this year pales in comparison to the $58.8 billion of cutbacks in 2008-09.
Dividend stocks now provide good protection against the stock market’s volatility, according to Richard Band, editor of Profitable Investing newsletter. That’s because dividends will provide you some return if share prices don’t, he writes on MarketWatch.
Band recommends Enerplus Resources Fund (Ticker: ERF), Raytheon (RTN) and Johnson & Johnson (JNJ). All three have high dividends and low risk, he says.
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