The Dividend Arrow Is Pointing Up

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When I first started writing for InvestorPlace, my editor’s first piece of advice to me was pretty simple:

“You can’t have enough stories about dividends.”

Naturally! Dividend-paying stocks are a fan favorite for those looking far into their financial futures, and overall, they represent an enormous slice of the investment-world pie.

And I’m happy to say that the pie has been getting even sweeter as of late.

According the S&P Dow Jones Indices, dividend net increases (excluding “special dividends” and “one-time dividend payments) were $8.4 billion during the 2012’s fourth quarter, with 1,262 dividend increases reported — that’s 94.5% more increases than in Q4 2011!

The broader picture on the dividend front for 2012 can’t help but make you feel warm and fuzzy as we start out this new year. Among the highlights:

  • For all of 2012, there were 2,883 dividend increases compared to 1,953 in 2011.
  • Actual cash payments increased 18% in 2012 compared to 2011.
  • Payout rates, which historically average 52%, remain near their lows at 36%.
  • Of the nearly 10,000 U.S.-traded issues, only 275 decreased dividends, including notables JCPenney (NYSE:JCP), Avon (NYSE:AVP) and KB Home (NYSE:KBH).

The takeaway: Unless a stock you back is in serious trouble (and hopefully, you’ll see enough warning signs that you’ll bail before the axe falls on the payout), continued distributions from your dividend stocks should be the norm, and increased payouts are becoming even more normal.

Don’t expect the heyday to end anytime soon. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, thinks 2013 looks good, too.

“At this point, even with many January payments paid in December, we should see 2013 as setting another record for regular cash dividends.”

And here’s the double bonus: The recent fiscal cliff deal was easy on investors. Families making less than $450,000 won’t see any increase in taxes on capital gains and dividends, while those making more will see a slight bump from 15% to 20% — far better than the worst-case 39.6% scenario.

So stock up, friends. The dividend checks will keep on coming, and you’ll be paying little to no more for the trouble. And best of all, a number of income-producing stocks were hammered as 2012 wound down (as people scattered in fear of those worst-case tax hikes), so many dividend stocks can be bought for a little more of a bargain.

If you’re looking for ideas, consider starting here, here or here. You also can check out our weekly lists highlighting companies that have recently increased their dividends here.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he does not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2013/01/the-dividend-arrow-is-pointing-up/.

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