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Think your favorite income investment has been especially generous in its dividend growth lately? The numbers say they could afford to be a lot more generous.
Companies in the S&P 500 are giving roughly a third of their profits back to shareholders in the form of a dividend. That’s well below historical average, which is closer to 40%. The stinginess is baffling considering that corporate earnings are at an all-time high.
They might not be able to get away with their stinginess for much longer. With the Fed on track to finally raise interest rates from near zero next year, the competition to attract yield chasers is about to get much more stiff. Public companies will have to step it up if they want to stand out in an increasingly crowded income field. And they have the money to do it.
The impending dividend wave is one of several topics we covered at Wyatt Investment Research this week.
Here’s what else was on our experts’ minds:
Is Berkshire Hathaway Stock Worth $200,000?– In just eight years, shares of Warren Buffett’s Berkshire Hathaway have doubled. With A-shares now trading above $200,000 for the first time ever, is the stock still a “buy”?
How to Ride the Biotech Stock Rally– Given biotech’s volatility this spring, many investors avoided the sector like the plague. But avoiding the volatility has been costly. Those investors that stuck with biotech, or bought into the weakness, have been well compensated.
Why the Golden Age of Dividend Investing Hasn’t Even Begun– With interest rates still near zero, the perception is that this is a golden age of dividend investing. In reality, most dividend payers are becoming mysteriously unwilling to cough up much of their cash.
Is Kinder Morgan’s Restructuring a Bad Deal for Income Investors?– A pioneer in high-yield energy master limited partnerships (MLPs) renounces the concept. How will a new corporate structure impact Kinder’s MLP investors?
Top 3 Hotel Stocks to Stay in Your Portfolio– The four-week average jobless claims are at the lowest levels we’ve seen since the start of the Great Recession in 2007. More jobs will translate into higher discretionary income. What better way to spend that money than on a getaway.
The Best Way to Invest in Aging America– There are many ways to invest in the aging of America, but adult diapers may prove to be the most intriguing possibility yet.
Three Stocks for the Long Run– There aren’t many stocks to hold forever. But these three fit the bill.
MRK Stock: The Grand Daddy of Pharma– Right now, Merck (NYSE: MRK), this nation’s second biggest pharmaceutical maker, is a curious animal: a value stock that’s priced like a growth stock.
Thanks for making us part of your weekend. Throughout the week, please make sure to visit WyattResearch.com for the information you need to know and opinions you need to read to become a better investor.
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