Are dividends back in style?
On July 3, S&P Dow Jones Indices noted that dividend net
increases were $12 billion in the second quarter, which is
believed to be a record. Howard Silverblatt, senior analyst at
S&P Dow Jones indices, said that cash payments increased 14%
in the quarter.
Apple 's (
) decision to pay a dividend added some shine to the dividend
ranks. But other stocks also have been initiating dividends.
More than 80% of the stocks in the S&P 500 pay a dividend,
the highest percentage in about a dozen years.
) paid its first quarterly cash dividend in September 2011 -- 28
cents a share.
The California-based company became the first stock in its
medical biomed industry group to pay a dividend -- at least among
the three dozen stocks that trade at or above $15 a share.
When Amgen announced the decision, the company said it planned
"to increase the dividend meaningfully over time." Beginning with
the March payout, the quarterly dividend was raised to 36 cents a
The current annual dividend yield is 1.9%.
Amgen is something of a comeback candidate. Earnings grew only
2% to 8% in the past four years, but are expected to advance 15%
this year. CEO Robert Bradway took the reins in May and analysts
are curious about how he plans to use the company's $19 billion
In March, the company acquired Micromet, a biotech focused on
cancer treatments. On June 12, Amgen said it closed on the deal
to acquire most of Mustafa Nevzat Pharmaceuticals, a privately
held company in Turkey. On July 5, Amgen wrapped up the
acquisition of the privately held, San Francisco-based KAI
All these acquisitions were initiated before the CEO
One risk factor Amgen shares with dividend stocks is taxes. In
April, Standard & Poor's senior analyst Silverblatt noted
that, "Under current legislation, taxes on dividends to
individuals almost triples in 2013."
Silverblatt and other analysts say this will cause companies
to emphasize share buybacks over dividend increases.