Dividends4Life: 2011 Should Be A Better Year For Dividend Increases

Please sir, I want some more dividends. Flush with cash and encouraged by a strengthening economy, companies are doling out dividend increases to the delight of yield-hungry investors. And with corporate profits rebounding strongly, the trend is likely to gather momentum over the next couple of years, analysts predict.

“February is extremely strong,” said Howard Silverblatt, senior index analyst with Standard & Poor’s in New York. “The good news is there’s going to be a lot more paid out this year than last year.” The flurry of dividend hikes reflects several factors, including the recovery in corporate earnings, low interest rates and record cash of nearly $1-trillion sitting on U.S. corporate balance sheets. More increases are almost certainly on the way. Even with the recent dividend increases, the S&P 500 payout ratio – the percentage of profits paid out as dividends – is still a conservative 27.4 per cent. That’s significantly lower than the average payout ratio of 43 per cent since 2000 and 52.3 per cent since the 1930s, suggesting there is plenty of room for dividends to grow.

Source: CTV News

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