Firms Paying Dividends Highest in Decade
The number of S&P 500 companies that have paid dividends to their shareholders, 402, is the highest since 1999.
The number of dividend payers is the highest it's been in the 21st century, which is good news for shareholders, since dividends, not stock prices, have brought investors the best returns in recent years, according to the Wall Street Journal's CFO Report.
Dividend payments in cash are expected to hit a record $275 billion in 2012, up from $241 billion last year.
Because companies are loaded with cash and feeling pressure from investors to share it, firms are slowly starting to pay dividends, usually in small percentages like 1 or 1.5 percent.
This year, Apple announced its first dividend since 1995. The company will pay a quarterly cash dividend of $2.65 per share of its common stock, payable Aug. 16, less than one percent of its current trading price. Apple stock was trading at $620.14, up 0.48 percent in the mid-afternoon.
"People are disappointed in the way the stock market has performed in last 12 years," said Josh Peters, editor of DividendInvestor, published by the investment firm Morningstar. "It crashed and came back again but stocks haven't really made forward progress."
Peters said he expects the number of companies that pay dividends to grow over time, in part to meet investors' expectations.
Historically, dividend payments have been a big portion of investors' portfolios. Of the S&P 500's nominal total return from 1910 to 2010, dividend yield and dividend growth comprised 90 percent returns for stock holders.
Some companies are known for paying consistent dividends, like General Mills, which paid $800 million last year in dividends.
Peters said companies that focus on consistently paying dividends to shareholders often are more focused on long-term growth strategies.
"It's a virtuous cycle," Peters said. "When they pay a dividend, they attract a shareholder that stays for the long term, and the management runs the business for the long term and thinks about how to continue paying a dividend over time."