Investors received more cash from their investments in the third quarter. S&P 500 companies increased their net dividend payouts by $15.0 billion, or 152% from the third quarter of 2016, when the gain totaled $6 billion net.
The more generous sums sprung result from both greater increases and lower cuts during the third quarter, according to S&P 500 Dow Jones Indices. Aggregate increases were $15.5 billion, a 69.5% increase from $9.1 billion, while dividend decreases declined 85.1% to $0.5 billion.
“With a more stable dividend base, and interest rates expected to increase, the rate of dividend growth may pick up,” Howard Silverblatt, senior index analyst at S&P 500 Dow Jones Indices said. “At this point the lack of negative dividend news remains the key catalyst. That could change, however, if we get income tax reform or repatriation, both of which are now going through Congress.”
Silverblatt’s report also noted that the increased flow was not due to more companies initiating dividends. Of the S&P 500 index, 417 stocks, or 82.6% pay a dividend, almost flat with 82.2% in the second quarter.
The average dividend increase for the quarter amounted to 14.4%, compared to 10.1% for the third quarter of 2016.
Companies may continue to feel confident continuing to share their largess with shareholders if the right conditions remain in place for the near future.
“For full-year 2017 dividends are on track to post a 7% gain, compared to a 5.6% gain for 2016, and income tax reductions could increase payments. At this point, Street estimates call for continued gains in earnings and cash flow, as well as the potential for repatriation, all of which traditionally stimulate dividend growth,” Silverblatt said.
Some of the S&P 500 companies with the highest five-year dividend growth rates are Southwest Airlines Co. (LUV, Financial) at 88%, Helmerich & Payne Inc. (HP, Financial) at 77% and Mastercard Inc. (MA, Financial) at 70%.
Those showcasing the highest dividend yields encompassed Macy’s (M, Financial) at 7.3%, Seagate Technology (STX, Financial) and Credit Suisse Asset Management Income Fund Inc. (CIK, Financial) at 7.72%.
