Tags: Dividends | Companies | Billion | investors

USA Today: Dividends Paid by Companies to Hit Record $263 Billion

By    |   Monday, 19 March 2012 01:32 PM

Investors want cash and companies appear to be responding with generous dividend policies.

Companies are on pace to pay a record $263 billion in dividends to shareholders over the next year, USA Today reported. That would top the $253 billion they were paying as of June 2008, S&P Capital IQ reported.

"We're seeing good dividend increases across the board," Richard Helm of Cohen & Steers Dividend Value fund, told USA Today. "Companies are running very profitable and cash-rich right now."

Apple Inc. said it will pay its first dividend in 17 years and buy back $10 billion in stock, heeding investors who urged it to return part of the $97.6 billion in cash amassed by robust demand for iPhones and iPads.

Shareholders will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and happen over three years, the company said.

Dividend payments setting new highs shows improving business fundamentals, banking health and returns for investors.

And companies can afford to pay more. They are paying out just 30 percent of their earnings as dividends, down from the 35 percent they've paid in recent years and 52 percent long-term average, Robert Maltbie of Singular Research told USA Today. "Dividends are going higher," he says. "Investors are demanding it. They want cash."

With interest on savings and yields on Treasurys at unimpressive rates, there are a lot of people looking for quality returns on their cash. The good news for them is that they can get in on the trend of increasing dividends at discount rates.

USA Today reports that dividend payments have returned to record levels even though stock prices, as measured by the S&P 500, are still below their 2007 peak.

And the deal is likely to get even sweeter as some analysts are expecting companies to increase dividends even further.

“Companies have the money, they have the ability, and dividends are back in fashion,” Howard Silverblatt, S&P’s senior index analyst, told Businessweek.

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Monday, 19 March 2012 01:32 PM
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