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Dividend Divas and Dividend Duds

Apple's payout may inspire new players -- or not

   

Money Falling iStock 000011863582XSmall 0 300x300 Dividend Divas and Dividend DudsWhen it comes to paying dividends, some companies beg for permission, while others simply refuse to share the wealth. Still others break down after years and finally give in to shareholder desires. An example of the latter, of course, is Apple (NASDAQ:AAPL)

The most popular, and one of the most profitable, companies around reached into its considerably deep pockets ($100 billion in cash) and came out with an inaugural quarterly dividend of $2.65 per share. The personal technology icon also said it would spend $10 billion over the next several years on stock buybacks.

For income-oriented investors, the long-awaited dividend from the highest-profile tech company out there offers hope that other well-heeled companies will opt to pull the trigger on a dividend of their own.

Here the leading candidates:

  • Online retailer Amazon (NASDAQ:AMZN), which has about $5.2 billion in cash on the books and another $4.3 billion in short-term paper
  • Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A,BRK.B), which has built up a war chest of more than $37 billion in cash.
  • Search giant Google (NASDAQ:GOOG), which holds $5.2 billion in cash and another $34.6 billion in short-term investments that could quickly be converted to cash.

All three of these companies are potential dividend divas, but for a variety of reasons, they’ve refrained from sharing their accumulated winnings with shareholders.

That makes these otherwise outstanding companies dividend duds.

Next in the Dividend Conga Line

Fortunately, another group of stocks is champing at the bit to give shareholders more money, and last week the government finally gave them permission to do just that.

I’m referring here to financial stocks, many of which moved to boost payouts as soon as news broke that they had passed the latest Federal Reserve “stress test.”

Credit-card issuer American Express (NYSE:AXP) wasted no time in lifting its quarterly dividend payout 11%, while financial services holding company BB&T (NYSE:BBT) upped its payout by 25%.

Retail and investment banking behemoth JP Morgan Chase (NYSE:JPM) wasn’t going to pass up a chance to increase its dividend, and it did so to the tune of a 20% increase in its quarterly payout.

Other stalwart financials that jumped at the chance to reward shareholders with more cash were Comerica (NYSE:CMA), which raised its quarterly payout a whopping 50%, U.S. Bancorp (NYSE:USB), which increased its dividend by 56%, and retail banking giant Wells Fargo (NYSE:WFC), which really let the reins loose on its quarterly payout with an 83% increase in its dividend.

Income investors would like companies like Amazon, Berkshire and Google to share the wealth, but for now, they are merely potential dividend divas. If your goal is income, stick with proven payout performers eager to please. That means financials, and now, even Apple.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/dividend-divas-dividend-duds-appl-amzn-bro-b-googsxp-jpm/.

©2014 InvestorPlace Media, LLC

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