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An insatiable hunt for yield amid five-plus years of near-zero interest rates has sent scores of investors to dividend stocks.
The shift has led many companies to place a greater importance on dividends. Dividends are now a larger portion of companies' total payouts, ahead of share buybacks, than in past market rallies.
In Q1, 944 of roughly 10,000 U.S. companies juiced payouts, either by increases, special dividends or resumptions. That was up a whopping 39.4% from 677 a year earlier, data from Barron's shows.
S&P Dow Jones Indices reports companies spent $105.2 billion buying back stock in Q1 and $70.9 billion on dividends. Forty percent of returns to shareholders now comes from dividends, up from 33% in 2011 and 26% in 2007.
Instead of saving extra money in the bank, which can pay next to nothing, investors can collect more than 2.5% — even double digits for certain plays – with the right dividend stocks. Plus, there's the appeal of capital appreciation among dividend payers.
While some rely on dividends to supplement income, others choose to reinvest their share for bigger future payouts. [For more on that strategy, check out This Time-Tested Strategy Could Be Your Winning Lottery Ticket]
Even better: the attraction of dividend-paying stocks goes way beyond yield.
Companies that pay dividends tend to be more mature and solid than non-payers. Usually it's only when a company reaches a sustainable level of success that it shares its wealth.
Paying dividends is also a way to make management more accountable to shareholders and less apt to take imprudent risks.
Plus, dividend payers historically hold-up better in markets than non-payers.
Indeed, over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually. Moreover, in addition to paying out cash to shareholders, dividend payers still beat non-payers by nearly 8% every year, according to Ned Davis Research.
Lucky for investors, the dividend boosts in 2013 keep coming.
Increasing Payouts in Dividend Stocks 2013
Following are a dozen companies that decided to pad portfolios with meatier dividends in the past month: