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  • S&P 500 Dividends Quarter Over Quarter

    The number of S&P 500 dividend payers reached its highest point since Sep. 1998. As of March 2014, 421 S&P 500 companies are now paying dividends, compared to 423 in Sep. 1998.[1]

    Big names increased dividends in the first quarter such as Exxon Mobile, Wal-Mart, JPMorgan, Proctor & Gamble, Bank of America, Coca-Cola, and Qualcomm. A striking 146 companies (35% of payers) announced dividend increases compared to 94 in the Q4 of 2013, a quarter over quarter increase of 55%. In Q1, S&P 500 dividend growth (4.0%) doubled that of price (1.3%). Since 2000, dividend growth has consistently outperformed price growth with a staggering 124% ($16.29 to $36.53) cumulative return compared to 33% ($1394.46 to $1852.39) for price.

    (click to enlarge)

    What does this mean for dividend investors? While risk-averse investors seek the performance and stability of dividends, they are instead exposed to price changes based on market speculations. Investors trying to capture the fundamental performance of proven companies may see their returns diminish because of this disconnect between dividends and price.

    [1] (According to data compile by Howard Silverblatt in his S&P 500 MarketAttributes: March 2014).

    Source: S&P Capital IQ, Reality Shares Research

    Apr 08 10:28 AM | Link | Comment!
  • Dividend Growth: Standing The Test Of Time

    With 2013 being another record-setting year for dividend growth in the S&P 500, having access to isolated corporate fundamentals has become an even more prominent issue for retail investors. According to S&P 500 data compiled by Howard Silverblatt of S&P Dow Jones Indices (from his January 6, 2014, email titled Q4 2013 dividends: a very rewarding quarter & year, with 2014 expected to continue up), 2013 actual dividend payments were up 11.99% over 2012. In addition, the 2013 regular cash dividend payments of $311.8 billion easily surpassed the previous record of $281.5 billion, set in 2012.

    In order to understand the historical consistency and dependability of dividend growth in the S&P 500, we analyzed and aggregated Bloomberg data for both dividend and price returns over the last 41 years (through 2013). For the purposes of our analysis, monthly returns are totaled (and not compounded) to arrive at the annual return figures.

    The results of our heat map analysis show dividend growth (i.e., the gross, aggregate dividends paid by the S&P 500 constituents over the previous 12 months) has delivered positive returns in 38 of the last 41 years:

    To further highlight the consistency of dividend growth in the S&P 500, monthly returns were continuously positive from January 1976 through February 1988, a span of 146 consecutive months (more than 12 years).

    Contrasting the attractiveness of dividend growth, we found S&P 500 price growth to be much less favorable over the same 41-year period:

    Monthly S&P 500 dividend growth was positive 83% of the time, while monthly S&P 500 price growth was positive 59% of the time. Furthermore, including 2013 when the S&P 500 grew by nearly 30%, there has not been one year in the last 41 where price returns were positive for all 12 months.

    We aren't the only ones talking about dividend growth. The Dividend Growth Investor on Seeking Alpha asked November 2012 "Why Am I Obsessed With Dividend Growth Stocks?" In addition to offering diversification, lower volatility, and a favorable risk/return profile, we conclude dividend growth also provides investors with moderately consistent returns in both up and down markets, along with reasonable downside protection in times of market uncertainty. We believe dividend growth has stood the test of time and can be an investor's best friend.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 07 4:15 PM | Link | Comment!
  • Pepsi: Shares Fizzle As Dividend Sizzles

    Pepsi (NYSE: PEP), the 'Live for Now' company released its Q4 2013 Earnings on Feb. 13, 2014. The company reported adjusted earnings of $1.05 a share beating estimates by 4 cents. Pepsi also increased their dividend per share by 15% to $2.62. This represents the 42nd consecutive year of annual dividend increases. This brings their 10-year annualized dividend per share growth compound annual growth to 11%.

    Unfortunately, the company missed slightly on revenue expectation by 0.2%. It turns out the 'Live for now' investors moved the stock lower by almost 3% over the past two days. For what, you might ask, aren't stock prices supposed to reflect fundamentals?

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: PEP, Dividends, Stocks
    Feb 14 4:59 PM | Link | Comment!
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