6 Dividend Stocks That Want to Pay You More Money
For most of this year, investors have been transfixed on stock prices -- and whether the venerable S&P 500 can possible surpass its 2007 all-time highs at 1565. But while scores of investors have been watching the S&P, they've missed the record-setting performance that dividends have contributed to the mix.
Stocks have never paid out more money in dividends than they're paying right now. Those record payouts have helped the S&P 500 Total Return Index (a version of the more familiar S&P index with dividends factored in) push through its record highs at the start of April, a milestone that investors should be paying attention to; clearly, it pays to be a dividend investor.
And with record $1 trillion in cash held among S&P 500 constituents, there's plenty of dry powder on corporate balance sheets to fuel even bigger dividend payouts in the future. Over the long term, though, the benefits of chasing dividends are even more dramatic.
Over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.
That's why we pay close attention to the firms that are shoveling more corporate cash to shareholders. With that, here's a look at six stocks that hiked payouts in the last couple of weeks .
The biggest name to hike dividends in recent memory is Hewlett-Packard(HPQ) , the $50 billion computer maker. The firm announced a 10% dividend increase on March 22, pushing its payout to 13.2 cents each quarter and driving its dividend yield to 2.1%.
HP is having a pretty good week: Shares climbed more than 7% yesterday following news that the firm had grown its share of the PC market. That good news should help investors forget about the company's problems -- at least for now.
These days, the PC business is a commodity business with few barriers to entry and where cost is king. That's somewhat advantageous for HP;because of its scale, the firm can drive costs lower than less mammoth peers. That said, management realizes that PCs aren't an attractive business, and CEO Meg Whitman and company realize that enterprise IT is a much more attractive driver of returns in the mid- to long-term.
This month, HP made the decision to combine its PC business with its printer business, a move that should help reduce the costs involved with both. While printers have fallen to the wayside in the last couple of years, the business does generate very attractive recurring revenues through ink sales -- it too should benefit from revamped operations.