CHICAGO (Reuters) – The golden days of summer might also brighten the portfolios of dividend lovers.
With most large corporations swimming in cash as the economy and earnings improve, adopting a dividend-centric strategy looks even more promising for moderate-risk investors.
Dividends, the portion of earnings that corporations pass along to shareholders in the form of quarterly payments, are becoming more generous. Not only do they reward long-term shareholders with higher total return, they are proven inflation hedges.
At the end of last year, the number of companies paying a dividend hit a new, 13-year high, FactSet reports. And while dividend payout ratios are close to their median level, they are at their highest level since the recession hit in 2007.
The current yield of S&P 500 stocks is around 2 percent, which beats most insured savings accounts. Unless a slowdown triggers earnings declines, the dividend surge is expected to continue.