Dividends Make A Comeback In 2011

Beck and  Randall, AP Business ,  Be a Dividend Millionaire: A Proven, Low-Risk Approach That Will Generate Income for the Long Term (AP) -- U.S. companies increased their dividends by a record amount in the first quarter. Since the start of the year, 117 companies in the Standard & Poor's 500 index said they would raise or start paying dividends. That amounts to a record increase of $16.6 billion, according to Howard Silverblatt, senior index analyst at S&P. Just 78 companies raised their dividends in the same period a year ago. The surge in dividends reflects a turning point in the long recovery from the financial meltdown in 2008. In the months that followed, companies were frozen by fear. In many cases, the answer was to slash or eliminate dividends and do what many Americans did: put cash in the bank and sit on it. As a result, U.S. companies have amassed a record $940 billion in cash. But now the economy is recovering, profits are rising and investors are demanding something for their patience. The easiest way to keep investors happy, besides a rising share price, is to restore or raise dividends. JPMorgan Chase & Co., for example, is increasing its dividend by a record $3.1 billion. Even companies that have long resisted dividends are instituting them. Cisco Systems Inc. said it would begin paying shareholders $1.3 billion per year, a record amount for a first-time dividend payer. "The fact that dividends are increasing is a clear signal that the economy and businesses worldwide are on a much firmer footing than a few years ago," said Kent Croft, the manager of the $421 million Croft Value Fund. Here is more evidence of the dividend boom: -- Financial companies raised dividends by $7 billion, accounting for 42 percent of all S&P 500 dividend increases. That came after the Federal Reserve announced March 18 it would allow some banks to raise dividends if they passed certain "stress tests." JPMorgan, Wells Fargo & Co. and State Street were among those that increased their dividends for the first time since the financial crisis. Citigroup Inc. reinstated its dividend. -- Ten S&P 500 companies announced during the first quarter that they would begin paying dividends. That's the most for any three-month period since at least 2003, when Silverblatt began collecting data.... Read more