Forget banks. Where to find dividends

JP Morgan Chase
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It's great that the big banks have been given the go-ahead to raise their dividends, but don't think they are all suddenly turning into dividend all-stars.

Goldman Sachs, for example, which boosted its quarterly dividend from 60 cents to 65 cents, has gone from a dividend yield of 1.3 percent to 1.4 percent.

Citigroup, which went from a quarterly payout of one cent to a nickel, now boasts a yield of 0.4 percent.

But some of them are starting to get into respectable territory. JPMorgan, for example, which boosted its dividend from 40 cents to 44 cents, now has seen its dividend yield go to 2.9 percent from 2.7 percent.

Wells Fargo, which went from a 35 cent quarterly payout to 37½,cents, now boasts a yield of 2.8 percent, up from 2.6 percent.

Both of these are respectable payouts, above the S&P 500's 2.1 percent.

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Still, for investors who really do want dividends, I would recommend ETFs that favor companies with a steady history of increasing dividend yields. This is a better strategy than just buying companies or funds that have higher dividend yields, because companies with a history of raising dividends usually are in better financial shape and tend to do better when the economy is improving, as it is now.

Two good examples are Vanguard Dividend Appreciation and Schwab U.S. Dividend Equity ETF. Both have very low costs and focus on quality companies.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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