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Dividend Growth May Slow; Apple, Microsoft Generous

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U .S. stock dividends hit a 10-year high, but the party is winding down as that critical pool of returns starts to slow. Aggregate payments in the S&P 500 reached $105 billion at the end of the second quarter, according to research firm FactSet.

All 10 S&P sectors exceeded their 10-year averages, with financials ($67.7 billion in dividends) and information technology ($59.6 billion) leading the way.

On a trailing 12-month per-share basis, a few technology and banking giants ranked among the most generous.

Apple ( AAPL ), which distributed $3.1 billion in Q2, raised its quarterly dividend 11% to 52 cents a share in April. Its annualized yield is nearly 2%.Microsoft ( MSFT ) paid out $2.5 billion. Its quarterly dividend is 36 cents a share, for an annualized yield of more than 3%.

Wells Fargo ( WFC ) andJPMorgan Chase ( JPM ) also led as the finance sector had one of the largest increases in dividends per share.

But FactSet warns that the heady pace of dividend growth will slow down.

S&P 500 per-share payouts should rise 7.6% in the next 12 months -- considerably less than the 11.3% rise in the trailing 12 months.

Eight of the 10 S&P sectors will see smaller dividend growth compared with the trailing 12 months ended in July. The consumer discretionary sector is forecast to suffer the largest deceleration, with financials next.

In the S&P 500, 316 firms raised their dividends on a trailing 12-month basis in the second quarter, down from 331 in Q1 of this year.

FactSet's report doesn't explain the reasons for the slowdown. But certainly the energy sector and other natural-resource companies are suffering from weak commodity prices. Also, S&P 500 companies have posted two straight quarters of declining revenue.

Even if rises in cash payouts get harder to come by, dividend-paying stocks have outperformed the S&P 500 Total Return Index in about two-thirds of the months that the index was down, FactSet says.

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


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

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