Investors have honed in on dividend exchange traded funds as Treasury yields remain depressed near historical lows. Now with companies raising payouts to shareholders to record levels, dividend ETFs look like they have even more going for them.
“Dividends continue to have a great year, with actual cash payments increasing over 19% and the forward indicated dividend rate reaching a new all-time high,” Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, said in an ETF Strategy article.
According to S&P Dow Jones Indices, companies increased dividends by $8.8 billion in the third quarter, with 439 dividend increases during the third quarter of this year, or a 25.4% gain year-over-year.
On the other hand, only 53 companies of the approximately 10,000 U.S. traded stocks diminished dividends in the third quarter, compared to 23 issues year-over-year.
For non-S&P 500 common issues, the percentage of dividend payers increased to 43.4% in the third quarter from 42.7% in the second quarter, 41.7% in the first quarter and 41.4% at the end of the fourth quarter 2011.
Silverblatt calculated that yields for paying issues dropped to 2.66% at the end of the third quarter from 2.77% at the end of the second.
“The yield decline was the result of a strong third quarter equity market,” Silverblatt said. “Yields remain relatively high when compared to competing income producers such as bonds, treasuries or CDs.”