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Investors seeking to mitigate their exposure to any pullbacks in the market, may want to consider companies rewarding their shareholders with dividends. As the market rally continues, dividend yields have been falling but there are some companies that are still raising their dividends. This week, tech giant IBM [IBM
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] announced that it would raise its quarterly dividend by 10% to 55 cents a share, marking the 14th straight year that the company has increased its payout.
S&P 500 Dividend Breakdown by Sector
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A breakdown of the S&P 500 by sector reveals that telecommunications, utilities, and consumer staples companies, as depicted on the table to the left, have on average the highest dividend yields. The utilities sector has 94% of its components paying a dividend, while the telecoms have the highest average yield of 9.31%.
While the market benchmark [.SPX
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] has gained 29.7% since its March sixth close, dividends could serve to help minimize any potential pullbacks.
Impact of the Rally
Of course, dividends are not guaranteed. Over the past few months, a number of companies, including CNBC's parent company GE [GE
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], announced cuts to their dividends. The following chart portrays the distribution of all the companies in the S&P 500, according to their corresponding dividend yields. The chart skews to the left, with fewer companies driving up the overall average. Approximately a quarter of all the companies within the S&P 500 do not pay a dividend. In addition to the dividend cuts, the rally over the past two months has pushed yields down further (Yield = Dividends / Price. As prices rise, yields fall). In the past six weeks, for example, the percent of stocks with dividends yielding less than 2% has jumped over 26%.
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The tables on the next few pages depict some of the companies in the S&P 500 with dividend yields north of 4%. The yields on these companies are based on the most recent data from Thomson Reuters. Note that these yields could change, as is the case with Eastman Kodak's [EK
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] announcement today that the company is halting its quarterly dividend.
As always, keep in mind that the information should help you generate ideas, but there is more homework to be done, especially with stocks paying dividend yields above 7%.
- Vote and suggest your own, and remember--there's a fine line between a hero and a zero.
- If you are lucky enough to have money and the time, this is a great time to see America, says CNBC's Jane Wells.
- What’s powering your microwave, fridge and computer? Part of it is fuel from Russian nuclear weapons. The NYT reports.
- One author sees lessons for you in Disney’s recent Makeover of Mickey Mouse: “Nice” doesn’t always win.
- With 123 years of history, slogans and commercials, Coca-Cola is the most recognized brand on earth.
- The opening of a virtual pet store in “World of Warcraft” could prove a cash bonanza for Activision-Blizzard.
Data is a real-time snapshot *Data is delayed at least 15 minutes