Companies hiked their dividend payouts by $12.7 billion in the fourth quarter of 2013, vs. $8.4 billion the same period in 2012. Standard and Poor's Dow Jones Indices says that 885 companies raised dividends in the quarter, well below 2012's 1,266 increases, but notes that 2012's increases were prompted by tax incentives.
All told, 2,895 companies raised their dividend rate last year, vs. 2,887 in 2012 and 1,953 in 2011.
2013 STOCK LAGGARDS: Dump them or buy them?
The companies that doled out the most dividends were -- surprise -- technology companies. The information technology sector paid out 15.35% of all dividends in 2013, up from 10.29% in 2011. Financial services paid out 13.75% of all dividends last year.
Dividend yields fell to 2.44% in the fourth quarter from 2.80% at the end of 2012. But that was due mainly to soaring stock prices: A company's dividend yield is its 12-month payout divided by its share price. As prices rise, dividend yields fall.
Telecommunications companies had the juiciest yields last year, at an average 4.76%. Utilities followed at 4.38%.
Companies can afford to boost their dividends (and to buy back more stock) because they're sitting on huge amounts of cash. Nonfinancial companies have a record $1.25 trillion in cash, and activists are pushing them to share the love with investors.
And dividends are wildly popular with investors in these days of low interest rates. Money market funds yield just 0.01%.
"Dividends continue to be one of the few income-generating alternatives available to investors," says Howard Silverblatt, Senior Index Analyst with S&P Dow Jones Indexes. "Interest rates have risen significantly this year, but are still historically low with alternative income producing instruments also low."
For long-term investo! rs, dividends make an enormous difference. Consider energy companies, whose stock prices have gained an average 611% since the end of 1989. Toss in reinvested dividends, and they're up an average 1,263%.
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