Cautious Optimism?

Amid all the negativity, there seems to be reason for some optimism. Companies have increased their dividends by a record amount in the first quarter. According to the article, 117 companies in the S&P 500 index said they would raise or start paying dividends. The value of the new and raised annual dividends announced by these companies adds up to a record $16.6 billion. Only 78 companies raised their dividends in the same period a year ago. This is a good sign for the economy. Many companies have avoided or reduced dividends in the past few years. Now they have renewed confidence in their shareholders and are rewarding them with dividends.Companies who have never issued dividends, like CISCO, Kohl's,and WellPoint, will now do so. In addition, some companies have increased their dividends(for more info check the article). However, this news should still be taken with caution. Even with the increases, quarterly dividends by companies in the S&P 500 are 13 percent lower than their peak in 2008. A few companies that increased dividends don't pay as much as before the recession. Dividend yields are also down for companies, especially those in the financials sector.

Overall, the news seems uplifting-especially when considering all that the market, the economy, and the world has endured in the last two years (and even last two weeks)-yet we should still be cautious. Many stocks are still facing rough periods and the economy is still very fragile. But the increase in dividends does bring in another option for investing: choosing companies based on dividend and dividend yield. Any opinions on this or any alterations in your portfolios?


http://finance.yahoo.com/news/Dividends-come-roaring-back-apf-1317489474.html?x=0