We've noticed a lot companies talking about dividends in the past twenty-four hours:
Dividends are incredibly important, accounting for nearly 50 percent of total stock market returns since 1900, according to our friends at www.bespokeinvest.com.
The reason? Compound return.
If we reinvest dividends rather than spend them, they have a profound impact on returns over time. Consider the difference between the S&P 500 Index and the S&P 500 Total Return Index, which uses dividend proceeds to buy additional shares:
Dividend reinvestment has helped fuel a 437 percent increase for the S&P 500 Total Return Index over the past twenty years, significantly surpassing the 267 percent gain for the S&P 500 Index. Again the difference is simply reinvesting dividends rather than spending them.
The number crunchers here at Bloomberg have devised a highly analytical model to forecast which companies are likely to raise their dividends (including the likely amount and announcement date). Their 87.8 percent accuracy over the past four quarters speaks for itself... and beats the Wall Street average of 74.1 percent. Of the 1,500 companies in the S&P 1500, 150 generate dividends yielding at least 3 percent, and Bloomberg forecasts 20 of these will announce dividend increases in the next six weeks.
We revealed ten of the companies on air, and we provide the full list of twenty for blog readers. Higher dividends... higher reinvestment... higher returns.
American Electric Power (AEP ), ConAgra Foods (CAG ), Health Care REIT (HCN ), Kimco Realty (KIM ), Kinder Morgan Inc (KMI ), Lockheed Martin Corp (LMT ), LTC Properties Inc (LTC ), Macerich Co (MAC ), McDonalds Corp (MCD ), Mercury General Corp (MCY ), Northwest Natural Gas Co (NWN ), NV Energy Inc (NVE ), Omega Healthcare Investors (OHI ), Pinnacle West Capital (PNW ), Sabra Health Care (SBRS ), Senior Housing Property Trust (SNH ), Spectra Energy (SE ), Tompkins Financial (TMP ), Vectren Corp (VVC ), Williams Companies (WMB )