Here’s a fun fact, courtesy of Dow Jones Indexes: Companies within the 30-member Dow Jones industrial average are expected to distribute a total of $104.7-billion (U.S.) in dividends in 2012, representing – here’s the interesting part – about 38 per cent of all indicated annual dividends paid by U.S. companies.
Of course, for investors who care more about yield than total distributions, this might not sound too impressive. But it does show that the Dow is the bedrock of dividends, and therefore provides some insights into the rest of the market.
What’s not so great, though, is that dividend increases are relatively slower than the broader market. Dow Jones expects companies within the blue chip index will raise their distributions by 12.3 per cent this year. While that might sound impressive, the five-year weighted average dividend-growth rate is 15 – and the broader market has a growth rate of more than 25 per cent.