The moves by Boeing, 3M and Mastercard follow an encouraging investor trend. Dividend payments in the S&P 500 will hit a new record this year: $310 billion (versus $282 billion in 2012).
That's good news, but remember: companies have tons of cash, so that increase is not as impressive as it seems. The dividend payout ratio (how much you are paying out as a percentage of the profits) remains low by historical standards. The current payout ratio for the S&P 500 is 36 percent on a Generally Accepted Accounting Procedure (GAAP)-earnings basis, according to Morningstar.
The good news is that is the highest payout ratio for the index since 1999, and a big improvement over 2011 when it was 29 percent--an all-time low. Dividends are growing faster than per-share earnings.
The bad news: it is still well below the 53 percent median annual payout ratio that was seen for the S&P 500 between 1946 and 1994.
Still, there's more good news: as a sector, industrials are really paying out. After the hike, MMM's dividend yield will be close to 2.7 percent. Boeing will be close to 2.2 percent. Buybacks are also on a roll, but you have to watch the number of shares being bought back, versus the number of new shares issued (largely in stock options).
The criticism of buybacks is they announce a purchase, but then issue more shares on the other end, mostly because of stock options.
That's why you watch Share Count Reduction. You want to buy back more than you issue, obviously. The good news, according to S&P, is that is exactly what is happening. For the third quarter, that metric in the S&P 500 edged down 0.58 percent. S&P is estimating that 2013 buybacks will top $482 billion, well above the $399 billion for 2012. Both of those figures, however are well below 2007, the record year for buybacks with $589 billion.
One caveat: because share prices are up roughly 25 percent from last year, if you want to buy back the same number of shares as last year you need to pay 25 percent more.