Recession fears and debt crises have nothing on dividends. Standard & Poor’s reported on Wednesday that within their universe of 7,000 publicly traded U.S. companies, 350 companies raised their dividends in the third quarter, up from 299 raises in the third quarter of last year.
Howard Silverblatt, senior index analyst at S&P Indices, noted that the gains boosted indicated dividend payouts by an impressive 14.5 per cent.
These gains are good news for investors who love to receive quarterly cheques. Even better news? Some indicators suggest there could be plenty more gains ahead. According to Mr. Silverblatt, the current indicated payouts are still 6.8 per cent below their peak in June 2008 – presumably because of the drastic dividend cuts made by a number of U.S. banks during the financial crisis.
But perhaps more important, the overall payout ratio lingers near a record low below 30 per cent, well off the historical average of 52 per cent.
“Part of the reason for the low payouts appears to be the uncertainty over the economy, which prevents companies from making long-term dividend commitments,” Mr. Silverblatt said.