On May 1, Apple announced a long-awaited dividend increase. The company, which is set to repatriate $283 billion into the United States, upped its payout, effective immediately, by 16 percent, from $0.63 per share to $0.73 per share. While its dividend yield is still a modest 1.56 percent, for the many investors who own the stock, a climbing dividend is a welcome development.
While Apple may be the most well-known company to raise its payout this year, it's by no means the only one. In fact, 2018 is on pace to be one of the best years for dividend increases.
From the start of the year through May 18, 187 companies have either increased or initiated a dividend, the second-highest number through the first five months of the year since 2011, according to S&P Dow Jones Indices. If 15 more companies do the same before month's end, this year will surpass 2015's 201 increases or initiations between January and May.
The average dividend increase is also climbing compared to the recent past. So far this year, payouts have risen on average by 13.85 percent, the fastest pace since 2014, when dividends rose, on average, for the full year by 17.5 percent. That's still relatively low — dividends grew on average by 26 percent in 2011 — but things are picking up.
Why the increase? With bond yields climbing, it may not be long before fixed income starts looking more attractive than stocks. Some companies want to counter that. "CDs are going up, so that will add pressure on yields," said Howard Silverblatt, an investment strategist with S&P Dow Jones Indices. "Companies are increasing dividends faster in 2018."