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If you've been collecting anecdotal evidence of rising U.S. dividends after a dismal time for payouts, here's something a little more concrete: Standard & Poor's proclaimed on Friday that there are indeed signs of life.
So far in the first quarter, 75 companies within the S&P 500 have increased their dividend rates, versus just two companies that have decreased them. Compare that to the first quarter of 2009, when there were 55 increases and an amazing 46 decreases.
In dollar terms, the turnaround is even more remarkable. This year's first quarter payouts have risen a net $4.4-billion (U.S.). Last year, net payouts fell $38.7-billion. Big U.S. financials were one of the big sources of dividend cuts last year, with many of them cutting their payouts to virtually nothing. Many other companies held their dividends unchanged amid uncertainty about their financial future.
Now, rising dividends are seen as a sign of rising confidence among U.S. companies. "Of significance is that seven issues in four different sectors were confident enough in their future earnings ability to initiate a dividend this quarter, which speaks to the recovery," said Howard Silverblatt, senior index analyst at S&P indices, in a release.
"April will be a critical month for dividends, with several large dividend payers having a history of declaring a dividend rate increase during the month." These companies include Exxon Mobil Corp., International Business Machines Corp., Johnson & Johnson, and Procter & Gamble.
On a related note, BMO Nesbitt Burns pointed out that dividends are the new vogue among global gold and silver producers.
"The number of precious metal companies that pay dividends is growing as profitability and cash flow increase for the industry," BMO analysts said in a brief research note.
They pointed out that Alamos Gold Inc., Harmony Gold Mining Co. Ltd., Kingsgate Consolidated Ltd., Lihir Gold Ltd. and Pan American Silver Corp. have initiated dividend payments over the past six months. The analysts believe that Silver Wheaton Corp., Coeur d'Alene Mines Corp., Golden Star Resources Inc., Gammon Gold Inc., Hecla Mining Co. and Red Back Mining Inc. might follow.
David Berman