U.S. dividend increases rise in 2010, more on horizon: S&P

NEW YORK (BestGrowthStock) – Dividend increases for S&P 500 companies are up sharply this year from 2009 levels, and the trend is likely to continue in 2011, according to Standard & Poor’s.

Dividend increases totaled 255 so far this year, up from 2009’s 157, S&P said. Two-thirds of current S&P 500 dividend payers are expected to pay more in 2011 than in 2010, it said.

S&P analyst Howard Silverblatt estimated increases could reach 290 next year, but he said these levels are well below what they were 30 years ago.

For example, a total of 371 companies paid dividends in 2010 compared with 469 in 1980, he said.

Still, the up trend is likely to put “traditional dividend investing” in favor once again, “as investors look for total return, stability and income,” Silverblatt said.

The recovery in corporate earnings has made the dividend outlook more favorable, as well as record cash positions by companies, S&P said.

Companies best known for dividend payments include utility and telecommunications firms. Analysts said dividend payers are also likely to benefit from the extension of the Bush-era tax cuts.

The S&P utility sector is up just 0.4 percent for the year to date, while telecoms are up 10.4 percent for the year so far.

Telecoms and utilities “are the highest-yielding issues … but yields that are low historically are still competitive,” Silverblatt said.

Among companies initiating or reinstating cash dividends in 2010 were Broadcom Corp, Carnival Corp, Starbucks, Whole Foods Market and Expedia Inc, S&P data showed.

(Reporting by Caroline Valetkevitch, Editing by Chizu Nomiyama)

U.S. dividend increases rise in 2010, more on horizon: S&P