2013 Expected To Be Record Year For Stock Dividends
With the major stock indexes at multiyear or all-time highs, investors have reason to cheer. They also have reason to applaud a little louder, as dividends are expected to hit record levels this year.
The S&P 500 companies are slated to pay $300.2 billion in shareholder dividends in 2013, up from last year's record of $281.5 billion. That's according to a research report released Thursday by Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
This would mark a 60% jump from the $188.2 billion low set in July 2009. Many companies -- fromBank of America ( BAC ) to homebuilderD.R. Horton ( DHI ) to bond insurerMBIA ( MBI ) -- had to cut or eliminate their dividends during the Great Recession of 2007 to 2009.
Firms can either invest their cash to drive future growth or return that cash via dividends and stock buybacks. So far this year, they're doing the latter. Silverblatt's report noted that year to date, 116 companies in the S&P 500 have hiked their dividends.
Two months and one week into 2013, the number of raises is at about 35% of the 333 dividend increases in 2012.
As for buybacks, research firm Birinyi Associates noted repurchase authorizations totaled 198 in the first two months of 2013 -- the most since early 2008.
Telecom services providerWindstream ( WIN ) and postage meters makerPitney-Bowes ( PBI ) have yields of 12% and 11%, respectively. They have the highest yields in S&P 500. But chasing stocks with the biggest yields isn't always a good thing. Sometimes it's the lower-quality companies that offer investors large dividend yields.
Even income investors should insist on some growth. After all, most firms pay shareholder dividends out of net income.