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Dividends Rise as Earnings Enhance
Dividend payouts elevated throughout the first three months of 2021, buoyed by bettering earnings outlooks. Corporations throughout a wide range of industries appear hopeful that the uncertainty and challenges of the previous 12 months could also be coming to an finish.
Within the first quarter of 2021, 120 firms within the S&P 500 raised their dividends in comparison with 91 within the fourth quarter of 2020. Simply two firms lowered or halted their dividends throughout this 12 months’s first quarter.
Dividends Underperform Amid Cuts
Many US firms lower or suspended their dividends throughout the first quarter of 2020 to protect capital, together with Ford (F), Boeing (BA), Marriott Worldwide (MAR), and lots of others.
In consequence, dividend shares have underperformed the broader markets. Final 12 months, from March via the tip of August, the MSCI World Index returned 55% in US {dollars}. The MSCI Excessive Dividend Yield Index returned 37% throughout the identical interval, however that disparity has been narrowing not too long ago.
Are Extra Dividend Raises in Retailer?
To date, dividend will increase aren’t enormous when in comparison with a 12 months in the past. Of the S&P 500 firms that raised their dividends within the first quarter, they did so by 11.1%. That compares to 9% in the identical interval a 12 months in the past.
As COVID-19 vaccine rollout efforts progress and the financial system reopens, firms will seemingly be extra prepared to return capital to their shareholders. Some analysts anticipate to see a 5% improve in payouts on a per share foundation in comparison with 2020 ranges. The previous 12 months has been troublesome for firms and dividend buyers, however now glimmers of hope are beginning to seem.
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