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Low payout ratio sets stage for dividend boosts in 2014

  • Q4 net dividend increases of $12.7B compared to $8.4B in 2012 Q4, according to S&P. The number of increases (885), however, pales in comparison to the 1,266 "tax-incentivized" hikes from a year ago (there were 649 in 2011).
  • Of roughly 10K traded stocks, 51 companies cut payouts in Q4 compared to 154 in the year-earlier quarter.
  • Room for more hikes? S&P's Howard Silverblatt notes payout rates - which historically average 52% - continue to remain near their low of 36%. "At this point, we expect Q1 to be a very busy positive period for dividends, with 2014 setting another record for payments."
  • The weighted dividend yield off 2.44% compares to 2.6% in Q3 and 2.8% in Q4 of 2012 as boosted payouts aren't quite keeping pace with the strong advance in equity prices.
  • Dividend ETFs: DVY, IDV, VIG, SDY, VYM, SDIV, HDV, SCHD, DWX, KBWD, PID, DES, DTN, PEY, SPHD, DIV, DHS, DLN, LVL, DTD, DGRW, DON, FDL, FVD, PFM, FGD, DOO, NOBL, DOL, SDYL, DVYL, DEW, IDOG, HGI, DGRS, DNL, DGRE, DVYA, RDIV, QDF, QDEF, QDYN, EMDG, IQDF, IQDY, IQDE, WDIV, FIEG
Comments (6)
  • mitrado
    , contributor
    Comments (1948) | Send Message
     
    Meanwhile, my bank offers me up to 2% on a savings deposit. Pre-tax, of course. That's 1.56% every year! Whoa! How can I (not) refuse?
    7 Jan, 12:42 PM Reply Like
  • smurf
    , contributor
    Comments (3783) | Send Message
     
    I remember the early 80's when money markets and cds were offering double digit rates. Investing was a no-brainer then.

     

    Of course, inflation was also double digits, too, so there's a trade off for everything.
    7 Jan, 12:45 PM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3601) | Send Message
     
    Curious- did they offer double-digit returns for long-term CDs like 10y+ or just for short term 1-3 ones? I was born in 1990, so I've never 'seen' anything higher than like 5-6%.

     

    If they offered 10%+ for 10y+ periods, it seems like a no brainer- but 1-2y might not be worth the opportunity cost (due to corresponding inflation as you mentioned)...
    7 Jan, 02:12 PM Reply Like
  • smurf
    , contributor
    Comments (3783) | Send Message
     
    Well, money markets themselves were offering in excess of 10% dividends. The highest paying one back in those days was Kemper. And, of course, they were liquid.

     

    CDs offered rates into the teens, but of course the longer the duration, the higher rate they offered.

     

    Inflation was an issue to people who had large families to feed or variable rate mortgages. Gas was zooming up then, also.

     

    All this was the result of Paul Volcker strangling credit to kill inflation, which he eventually did.
    21 Jan, 03:40 PM Reply Like
  • healthythoughts
    , contributor
    Comments (2850) | Send Message
     
    VIG, VYM & SDY have all been consistent dividend payingstocks/ investments
    7 Jan, 01:23 PM Reply Like
  • healthythoughts
    , contributor
    Comments (2850) | Send Message
     
    CD interest rate history

     

    http://bit.ly/1d2l2To
    7 Jan, 03:39 PM Reply Like
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