The total number of S&P 500 (INDEXSP:.INX) dividend paying companies at present is 402, an indication of a growing trend since December 1999, according to the report published by the Wall Street Journal.
The report was based on the data presented by Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. This year alone, thirteen companies started paying dividends to shareholders, including GameStop Corp. (NYSE:GME), Dell Inc. (NASDAQ:DELL), and Apple Inc. (NASDAQ:AAPL).
According to the report, Exxon Mobil Corporation (NYSE:XOM), pays the largest amount of dividends worldwide. The company recently increased its dividend payout by 21 percent, from 47 cents to 57 cents. The company is now paying an annual dividend of $2.28 per share. Exxon Mobil is paying $10.75 billion in dividends per year to its shareholders.
The second largest S&P 500 (INDEXSP:.INX) corporate dividend payer is AT&T Inc. (NYSE:T), with a total annual dividend payment of $10.44 billion to its shareholders. In December 2011, its board of directors approved a 2.30% increase in dividend payments per share from 43 cents to 44 cents per share.
Apple ranked third with $9.88 billion in total annual dividend payout to shareholders, after the company decided to initiate a quarterly dividend of $2.65 per share.
According Silverblatt, in an e-mail statement, Google Inc (NASDAQ:GOOG) or Amazon.com, Inc. (NASDAQ:AMZN) pays at least 1.5 percent, the technology sector will be the largest dividend paying sector. He said, “Lots of things have changed over my 35 years, but the statement that technology could be the biggest payer definitely needs to be added to my ‘who woulda thunk it’ list. As for investors, they need to look at technology as a dividend payer. It may still have a higher beta (volatility) than other dividend issues, but it is a player, and the dividends need to be incorporated into the total return risk-reward formula.”
He also expressed his concern regarding dividend taxes. He noted under the current legislation, dividend taxes will nearly triple next year. It will increase from 15 percent to 43.4 percent.
He suggested that companies will be forced to re-examine the return to shareholders policy. There is a possibility for companies to pull back plans to increase dividend payouts and to repurchase shares.
Silverblatt said, “From an individual investor’s prospective, the risk-return ratio shifts significantly, since you would now be keeping less than 57 cents on the dollar, compared to the current 85 cents.”
Dividend paying stocks are beneficial to investors, particularly during financial crisis. In recent years, dividend trades in the United States flourished, despite the slow growth of the economy and on-going financial instability in the European region.
Some analysts are concerned about the rapid increase of dividend trade. They think investors, dependent on dividend income maybe at risk.
