Dividend Stocks 2013: See if Your Favorite Just Raised Its Payout
By Diane Alter, Contributing Writer, Money Morning•
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.
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:
Airgas Inc. (NYSE: ARG) sweetened its dividend on May 2 by 20% to $0.48 per share up from $0.40. Shares yield 2%.
Cardinal Health Inc. (NYSE: CAH) rewarded shareholders with a 10% dividend boost to $0.30 a share, which is $1.21 on an annualized basis. The healthcare giant increased its dividend 16% last October, making the May increase the second boost this fiscal year.
EMC Corp. (NYSE: EMC) increased its share buyback program to $6 billion from $1 billion and announced it would start paying a quarterly cash dividend of $0.10 to shareholders. The first payment arrives July 23.
International Business Machines Corp. (NYSE: IBM) hiked its quarterly dividend 12% to $0.95 per share payable June 10 to shareholders of record May 10. The increase marked the tech behemoth's 18th consecutive year of dividend increases. Shares yield 1.91%.
Macy's Inc. (NYSE: M) raised its quarterly dividend 25% to $0.25 a share and unveiled a $1.5 billion increase to its share buyback program. The latest dividend increase is the department store giant's third increase in the past two years.
Northrup Grumman Corp (NYSE: NOC) lifted its divided by 11% to $0.61 a share, up from $0.55. Shares are up some 32% year-to-date.
Packaging Corporation of America (NYSE: PKG) raised its quarterly dividend 28% to $0.40 a share. Shares of the corrugated products manufacturer yield an attractive 3.32%
Potash Corp.'s (NYSE: POT) board approved a 25% increase in the company's dividend to $0.35 per share, up from $0.28.
Southwest Airlines Co. (NYSE: LUV) showed the love when it quadrupled its quarterly dividend from $0.01 to $0.04. In addition, the company increased its stock repurchase plan from $500 million to $1.5 billion.
The Clorox Co. (NYSE: CLX) hoisted its dividend nearly 11% to $0.71 per share, up from $0.64. Investors have been cleaning up with the bleach company every year since 1977 with dividend hikes.
Tiffany & Co. (NYSE: TIF) shined up its precious dividend by 6% to $0.34 a share. The enhancement marked the 12th increase over the last 11 years in payouts to shareholders.
Viacom Inc. (Nasdaq: VIA) increased its dividend 9% to $0.30 a share and remains committed to its ongoing $10 billion share repurchase program. Shares yield 1.81%.
As we've warned our Money Morning readers, not all dividend stocks are created equal. Our dividend stock expert Martin Hutchinson has outlined the best ways to add dividend stocks to your portfolio, and you can get those here: Dividend Stocks to Buy Now