One byproduct of a recovering economy is increased dividend payouts
from some of the nation's largest companies, and the number of
companies doing so has hit records. As luck would have it, many of
them are holdings in top exchange traded funds (ETFs).
A record 22 companies recently announced that they are raising
their dividend payouts to shareholders.
The Motley Fool reports that
several solid blue-chip companies such as IBM (NYSE:
IBM
), Costco (NYSE:
COST
) and Exxon Mobil (NYSE:
XOM
) are among those boosting payouts. [
Why dividend ETFs Are in the Spotlight.
]
Selena Maranjian for The Motley Fool reports
that
there are three points that investors should consider before
selecting a dividend paying company.
-
Consistency:
Look for reliability. The S&P 500's list of "Dividend
Aristocrats" features the elite of the dividend world: companies
that have increased their dividends for 25 years in a row.
-
Protection:
Look for sustainability. A too-high payout ratio is a red flag
that can warn you about potential dividend cuts in the future.
The payout ratio is the percentage of net income paid out in
dividends; if a company is giving most or all of its income back
to shareholders, it won't have much cash left for other
needs.
-
Growth and Sharing:
A low payout ratio suggests that a company has a lot of room for
growth on the dividend front. Over the long haul, expected
dividend growth is arguably more important than a stock's initial
yield, since it can boost a modest yield into a payout
powerhouse. [
More on PEY.
]
Some of the companies expected to up their dividend payouts:
- Exxon Mobil Corporation engages in the exploration,
production, transportation, and sale of crude oil and natural
gas. The company raised its quarterly dividends to 44
cents/share, up from 42 cents/share.
- Sunoco Logistics Partners L.P. (NYSE:
SXL
) engages in the transport, terminalling, and storage of refined
products and crude oil, as well as the purchase and sale of crude
oil in the United States. The company increased quarterly
distribution to $1.11 per share, from $1.09 prior.
- Chevron Corporation (NYSE:
CVX
) operates as an integrated energy company worldwide. The company
raised its quarterly dividends by 5.90% 72 cents/share.
- International Business Machines Corporation (NYSE:
IBM
) is an information technology (
IT
) company. The company increased its dividend by 18% to 55
cents/share.
For more stories about dividends, visit our
dividend ETF category
.
-
iShares Dow Jones Select Dividend Index (NYSEArca:
DVY
):
Chevron 2%
-
SPDR S&P Dividend (NYSEArca:
SDY
):
Sunoco 2.2%; Coca-Cola 1.8%;
-
WisdomTree Large Cap Dividend (NYSEArca:
DLN
):
Exxon Mobil 3.8%; Procter & Gamble 2.7%; Cocoa-Cola 1.8%;
Intel Corp. 2.1%; IBM 1.5%; Eli Lilly 1.1%; Pfizer2.4%; Proctor
& Gamble 2.7%
-
PowerShares Dividends Achievers Portfolio (NYSEArca:
PFM
):
Chevron, 5.2%; IBM, 5.1%; Procter & Gamble, 5.1%; Exxon,
4.8%; Coca-Cola, 4.3%
