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 ( AAPL ) 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.
Amgen ( AMGN ) 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 share.
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 cash.
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 Pharmaceuticals.
All these acquisitions were initiated before the CEO change.
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.