Dividends Are Back

 

As American businesses were telling employees to work from home back in the spring, they were also making other consequential decisions, namely cutting payouts to shareholders in the form of dividends and buybacks. But as stocks have soared back and the economy restarts, my colleague Lawrence Strauss notes that many companies are bringing back the income stream that so many investors rely on. 

What a difference a few months can make. In April, when the pandemic began to have an impact on many U.S. companies, a dozen firms in the S&P 500 announced dividend cuts and another dozen suspended their payouts. It’s worth noting, however, that even during that difficult month, 19 companies declared dividend increases—a testament to the resiliency of many businesses. Those included Johnson & Johnson and Procter & Gamble.

Somewhat surprisingly, some of the restored dividends are coming from the beleaguered retail sector. Foot Locker, La-Z-Boy, and shopping center operator Kimco Realty have all resumed their dividend payments, though at reduced levels from prior to the pandemic.  

Lawrence notes that 13 companies in the S&P 500 announced dividend increases in August, versus two announced cuts. 

The S&P 500 currently yields 1.77%. A year ago, the yield was 1.93%.

For more on dividends, check out Lawrence's latest story here.