Dividends Galore: Expect Another Record Year in 2013

 

By Steven Russolillo

For dividends, 2012 was a banner year. More of the same is expected in 2013.

S&P 500 companies paid out a record $281.5 billion in dividends last year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. That marked a 17% increase from a year ago and a 14% advance from the previous all-time high set in 2008.

Special dividends announced last quarter ahead of the fiscal cliff played a big role in the record payouts. Corporations announced more special dividends – or one-time payments that occur outside the normal payout cycle – last month than in any other December since at least 1955.

But even as the cliff has been averted, Silverblatt sees the new year following a similar path as 2012.

“Expect to see more dividend increases across all sectors, with few decreases, resulting in a new record dividend payment for 2013,” Silverblatt says in an email.

The tax on dividends, about 15% last year due to the cuts that took place under President George W. Bush, will rise to as high as 20% in 2013. The increase was announced last week when Washington reached a deal on the fiscal cliff.
More In Dividends

    Special Dividends Shatter Records, Thanks to Fiscal Cliff
    Show Me the Money: Companies Keep Dishing Dividends Ahead of Cliff
    Will Apple Announce Special Dividend? Don't Count on It
    Show Me the Money!: Costco Joins Rapidly Increasing Special-Dividend Club
    Wal-Mart Isn't Messing With Fiscal Cliff; Moves Up Dividend

Fourteen companies started making regular cash payouts to shareholders last year, including GameStop Corp. Dell Inc. and the big kahuna Apple Inc. That brought the total to 403 companies in the index that are paying dividends, the highest amount since November 1999.

Meanwhile, the S&P 500′s dividend yield currently stands at 2.3%. Compare that to the 10-year Treasury yield, which has been hovering around 1.9%, and dividend-paying stocks look fairly attractive at current levels in the current investing environment.

“The range of yields within equities, from lower yielding growth issues to higher yielding income producers, leaves investors with one of the few remaining areas of choice with some degree of measurable stability,” Silverblatt says.

Even better results are expected in 2013.

“Even if there are no changes to the index or any of the dividend rates for 2013, S&P 500 dividends payments will be 3.6% higher than the 2012 record amount,” Silverblatt adds. “ The only way (again, assuming no index changes) for there not to be a record in 2013 is for mass cuts in dividends.”