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It’s a ‘Golden Age’ for Dividends: Fund Manager

Friday, 14 Jun 2013 | 9:34 AM ET
Adam Jeffery | CNBC

Forget the doomsayers claiming that there's been a dividend bubble and it's bursting, two fund managers said in a panel discussion at the Morningstar Conference on Thursday.

"As CEOs allocated more of their money toward dividend growth, interest in dividend stocks took hold," Hersh Cohen of ClearBridge Investments said. That has taken dividend stocks from what he characterized as "extremely undervalued" a few years ago to "fairly valued" today.

"The stocks got extended, not overpriced," he said.

And companies have continued to raise dividends, leading Cohen to call the current environment the "Golden Age" for dividends. He said that the last five months has seen the "most staggering" increase in dividends.

He ticked off companies like Caterpillar, Wal-Mart and 3M that have all hiked their dividends in recent weeks.

Even techs like Qualcomm and Texas Instruments have been raising their dividends, Cohen said.

But while he still likes dividend stocks, he does concede that it's harder finding good ideas now.

(Read More: BlackRock's Top Two Dividend-Growth Plays)

Pile Up on Stocks With Dividends: Cramer
In this segment of "Cramer's Stock Market Survival School," Cramer emphasizes the importance of keeping your portfolio diversified and making sure it include stocks with juicy dividend.

Tweedy, Browne fund manager John Spears agrees. "It's an easier climate for selling stocks than buying them," he told the same panel.

But there are still attractively priced dividend payers, particularly in the energy space. He pointed to European energy companies Royal Dutch and Total as examples.

In the U.S., Cohen said he's had better luck with Chevron than Exxon. "Chevron has been a great dividend raiser and capital allocator," he said.

While price is important when buying stocks, Cohen says "investors lose sight that their income can double in nine years" with dividend payers.

By CNBC's Justin Menza. Follow him on Twitter @JustinMenza.

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