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It's been a great year for anyone interested in dividend stocks - and it looks like it'll get even better.
Corporations in the S&P 500 are expected to pay at least $300 billion in dividends in 2013, up from last year's $282 billion, according to S&P Dow Jones Indices.
And some of the dividend hikes represent a healthy payout boost.
For example, one of the latest in a string of companies to boost dividends, QUALCOMM Inc. (Nasdaq: QCOM), recently announced a 40% increase in its dividend.
Besides QUALCOMM, Hess Corp. (NYSE: HES) hiked its dividend 150%, HollyFrontier Corp. (NYSE: HFC) 50%, The Home Depot Inc. (NYSE: HD) 34%, The TJX Cos. Inc. (NYSE: TJX) 26% and Applied Materials Inc. (Nasdaq: AMAT) 11%, to name just a handful.
The good news: If you haven't yet joined the payout party, you can expect even more dividend increases in the weeks ahead.
The payouts come as companies tap into a cash hoard they have built up the past few years. U.S. companies have a record $2 trillion-plus in cash on hand.
"Corporations are flush with cash, and that cash sitting in the corporate coffers is earning next to nothing," Rob Leiphart, an analyst at Westport, CT-based market research firm Birinyi Associates Inc., told The Wall Street Journal. "Companies have to do something with it."
They've accumulated their large cash piles in part by cutting expenses and taking advantage of low interest rates to borrow funds.
Companies also are willing to increase payouts because of improved confidence in the economy at a time when the Dow has hit record levels and unemployment just fell to a four-year low of 7.7%.
"The increases in dividends could be a sign of normalization in the economy; a lot of the increases are restoring dividends to the pre-2008 level," says Money Morning Global Investing Strategist Martin Hutchinson.
Dividends are how investors get the most return for their money. It's estimated dividends and reinvestment of dividends can account for 85%-90% of total stock market returns.
Dividend stocks also tend to outperform non-dividend payers in bull and bear markets, as this data shows...
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