S&P Says Dividend Payouts On Track For Record In 2013

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This year is shaping up to be a record year for dividend payments as companies fill their coffers with cash, according to a report Wednesday from S&P Dow Jones Indices.

Dividend payments rose by a net 12% in the first quarter to $14.5 billion, the index provider said. A total of 944 companies raised their dividends in Q1, up 39.4% from Q1 of 2012.

"At this point, 2013 will easily surpass the 2012 record dividend payment" that includes special one-time payouts made late last year ahead of a dividend tax hike, wrote Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Yet he noted that payout rates -- the ratio of dividends to net income -- remain near their lows at 36% vs. the historical average of 52%.

Companies are still "very nervous about committing going forward" despite record-high levels of cash, Silverblatt said in an interview.

Many companies slashed their payouts during the financial crisis to preserve cash as profits shrank. Those companies are now starting to restore their payouts. "The dividend cycle is solidly back on the upward track," Silverblatt said in his report, adding that dividend hikes are broad-based.

The 12 months through March showed 3,154 dividend increases compared with 2,120 in the prior 12 months, Silverblatt wrote.

Visa ( V ) andFord Motor ( F ) doubled their quarterly dividends in the first quarter.Dunkin' Brands ( DNKN ), clothing retailerGap ( GPS ) andWal-Mart ( WMT ) are also among companies that have boosted their dividends recently.

Silverblatt said the weighted dividend yield fell 19 basis points to 2.61% in Q1 as stocks rose 10%. But he said yields remain "relatively attractive" compared with instruments such as corporate bonds, Treasuries and bank CDs.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: DNKN , F , GPS , V , WMT

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