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Dividends Back on the Rise

Dividend investors might have something to cheer about this year as the number of dividend increases is back on the rise. Looking at the monthly difference between positive and negative dividend actions, we are at levels not seen since July 2008. So far for 2010 and on an annualized basis, we are at levels not seen since 2007. Yesterday alone, five S&P 500 companies raised their dividends. Positive actions are measured by increases in or initiations of dividends while negative actions are measured by decreases in or suspensions of dividends.

The numbers are even more dramatic when looking at the dollar value of these dividends. In 2007, there were $31 billion in positive actions and almost $6 billion in negative actions. The positive values fell to $19 billion in 2008 and $11 billion in 2009 while the negative numbers surged to $41 and $48 billion in the past two years. $42 billion of reductions and suspensions occurred in the first quarter of 2009 alone.

Now 5 weeks into the year, the numbers appear to have turned the corner. According to Howard Silverblatt of Standard and Poors, February is the busiest time of the year for dividend increases (followed by January and reflected by the spikes in the chart above). This is due in part to the annual cycle of companies preparing their 10-K's and getting ready for their annual shareholders meetings. Silverblatt points out that he expects dividends to increase again at the end of the year as companies gain confidence in the economy. However, he points out, that even with the increases, it may take until 2013 until we are at 2008 levels again in dollar value payouts.

Here is a sample of S&P stocks that have raised their dividends this year:

  • Airgas Inc (ARG)
  • CMS Energy (CMS)
  • CenterPoint Energy (CNP)
  • Cintas Corp (CTAS)
  • CVS Caremark Corp (CVS)
  • Consolidated Edison (ED)
  • Family Dollar Stores (FDO)
  • Hershey Co (HSY)
  • L-3 Communications Hldgs (LLL)
  • Linear Technology Corp (LLTC)
  • McGraw-Hill Companies (MHP)
  • News Corp 'A' (NWS.A)
  • Pall Corp (PLL)
  • Praxair Inc (PX)
  • Tiffany & Co (TIF)
  • Time Warner (TWX)
  • Washington Post'B' (WPO)

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