Investors, Dividends Rediscover the Love
Paying dividends is starting to pay dividends.
For much of the past year-and-a-half, investors ignored stocks paying healthy dividends. Keep your dividends, the investors seemed to say, we would rather take our chances on capital gains from rising prices. Even after taxes on dividends were slashed last year, most investors shrugged.
But there has been a change of heart in the past few months. Since February, companies paying dividends have done somewhat better than stocks that don't make such payouts. Now some analysts are starting to recommend that investors focus on stocks such as American Express, Chubb, Exxon Mobil, Viacom and Lockheed Martin that could boost their dividends in the months ahead. Other investors are searching for companies that might institute dividends for the first time, such as Yum Brands.
"The quality trade -- dividend payers with stable earnings and strong cash flows -- will be the way to play 2004," says Jason Trennert, strategist at International Strategy & Investment, a New York research firm. "As we've gone through tax season," dividend stocks have begun to be appreciated by investors. That trend likely will continue, some analysts predict.
Dividend-paying stocks aren't exactly flying off the shelves. Stocks in the Standard & Poor's 500 making such payouts are flat since February, while those in the index that don't pay dividends are down a bit more than 1%, according to ISI's research. And in the past few weeks companies holding off on dividends have done a bit better again, partly because the bond market's tumble has sent bond yields higher, making them more competitive with stock dividends.
In fact, many companies continue to prefer buying back shares with their extra cash, rather than start paying out dividends, despite last year's move to cut taxes on dividends.
But some say dividend-paying stocks, and those likely to begin paying out dividends, increasingly will be in demand as the year progresses -- and during the next few years.
Behind the bullishness is a view that price/earnings multiples on most stocks already are stretched, so it will be hard for many stocks to climb unless recent sharp earnings growth can continue. At the same time, last year's tax change, which cut dividend-tax rates for most investors, has made dividends more attractive. The top federal income-tax rate on most corporate dividends now is 15%, compared with rates as high as 38.6% in 2002.
Some say companies paying dividends are more valuable as interest rates rise, as they have lately. While rising rates make bonds more competitive with the still-skimpy dividends of most stocks, higher interest rates also make it more difficult for many highly leveraged and growing companies, putting a damper on riskier stocks and steering more investors to the safety of stocks paying dividends.
Rather than simply focusing on stocks paying high dividends, some analysts say the smarter move is to target stocks likely to boost dividends or begin paying them. Higher dividends likely won't mean much of windfall for investors, and there is some evidence that high-dividend stocks underperform for long stretches of time. But when a company raises its dividend, or begins making dividend payments, it can be a sure sign of the long-term health of these companies, some analysts say.
THE DIVIDEND DRAW
Some analysts are recommending that investors focus on stocks that may boost their dividends soon, such as those shown below. Dividend yields are dividends as a percentage of share price.
Dividend Dividend Yield Share Price
Company Yesterday 52 Weeks Ago Yesterday 52 Weeks Ago Yesterday 52-Week % Change
IMS Health $0.08 $0.08 0.33% 0.50% $23.98 63.80%
Caterpillar 1.48 1.4 1.83 2.7 81.03 57.6
Yum Brands - - - - 37.81 55.4
United Technologies* 1.4 1.08 1.59 1.7 88.17 41.6
Burlington Resources 0.6 0.55 0.91 1.2 65.81 40.9
American Express 0.4 0.32 0.8 0.9 49.8 37
Exxon Mobil 1 0.92 2.31 2.7 43.3 24.8
Cardinal Health 0.12 0.1 0.17 0.2 70.65 24.1
Clear Channel Commun. 0.3 - 0.68 - 43.98 14.7
Viacom B 0.18 - 0.44 - 40.62 1.8
*Annual rate increased on April 9; United Technologies had been paying 98 cents per share.
Sources: WSJ Market Data Group; Thomson Datastream
"Dividends are nice to have, but for me it's a question of the strength of the underlying company, dividends are more important as a signal," says Abby Joseph Cohen, Goldman Sachs's global strategist. "Shareholders are looking for some affirmation that companies feel good about the future" and raising dividends are a "powerful signal," says Ms. Cohen.
Academic studies lend some backing to this view. A recent paper by Prof. Alon Brav of Duke University, along with professors John Graham, Campbell Harvey and Roni Michaely, surveyed almost 400 executives and found that they view dividend payouts as a step that conveys "management's confidence about the future." Since executives are reluctant to cut dividends, they only raise them after becoming more upbeat about the outlook for their companies.
In addition to American Express, Exxon Mobil and Viacom, Goldman Sachs analysts point to Sunoco and United Technologies as two other stocks that are producing so much cash flow and earnings that they may soon announce higher dividends. ISI's team of analysts point to PepsiCo, 3M, Viacom and Clear Channel Communications as companies that could raise dividend payouts. Other speculate that Microsoft could boost its recently announced payout.
"Strong earnings and cash flows in 2003 set the stage for large dividend increases in 2004," predicts Michael Clement, a Goldman analyst. "Dividend increases usually lag improvements in cash flows, as companies are reluctant to raise dividends at the first signs of expansion."
One catch: Most dividend moves are done in the first and second quarters of the year, as companies try to court investors around the time of an annual meeting. "By late spring or early summer this theme will be much less interesting," Goldman's Ms. Cohen says.
投资者开始追捧派息股
派发股息在提振股价方面正在开始发挥威力。
在过去一年半的大部分时间里，投资者对派发不错股息的股票视而不见。投资者似乎表示，"留著你们的股息吧，我们更愿意买进股价可能上涨并带来资本收益的股票。"甚至在去年股息税下调后，大多数投资者对派息股票也不屑一顾。
但是在过去几个月里，投资者的心理发生了变化。自从2月份以来，派发股息的公司股票表现要相对好于不派发股息的公司股票。现在，一些分析师也开始建议投资者重点关注美国运通(American Express)、Chubb、埃克森美孚(Exxon Mobil)、维亚康姆(Viacom)以及洛克希德马丁(Lockheed Martin)等几只未来几个月可能提高股息的公司。还有一些投资者正在搜寻可能首次派息的公司，比如百胜餐饮集团(Yum! Brands)。
纽约研究机构International Strategy & Investment的策略师特伦纳特(Jason Trennert)说，那些收益稳定并有强劲现金流的派息绩优股将在2004年股市中大出风头。他说，由于已经过了纳税季节，这些股票开始获得投资者的青睐。一些分析师预计，这种趋势在一段时间内将持续下去。
派发股息的股票也并非已经一飞冲天。根据ISI的研究，标准普尔500指数成份股中派息股自2月份以来总体表现持平，而那些不派息的成份股则跌幅略大于1%。过去几周中，不派息的股票表现又开始略好于派息股，部分原因在于债市大幅下挫推动债券收益率上升，使得与股息收益相比，债券收益率更具竞争力。
实际上，尽管去年股息税下调，但许多公司仍倾向于利用多余的现金回购股票，而不是发放股息。
但一些分析师说，随著时间推移，在未来数年内，那些派息以及可能开始派息的个股将越来越受到投资者追捧。
支持这种乐观看法的是，大多数股票的本益比已经很高，因此除非近期收益迅猛增长的势头能够持续，否则许多股票难以继续攀高。与此同时，去年税率调整使得股息收益变得更具吸引力。目前针对大多数公司股息的最高联邦个人所得税率为15%，而在2002年时则高达38.6%。
一些人表示，随著利率上升，派息个股将会更有价值。虽然利率上升会使债券收益率相对于大多数股票尚显吝啬的派息更有竞争力，但利率上升也使得许多财务杠杆较高的成长型公司运营困难，这会打击风险较高的股票，并促使更多投资者买进安全的派息个股。
然而，事情并非仅仅关注高派息股那么简单，一些分析师说，更聪明的做法是买进可能提高股息或者首次派息的股票。高派息给投资者带来意外横财的可能性不大，而且有证据表明，在较长时间内，高派息股表现将弱于大盘。但是，一家公司提高股息或者首次派息几乎可以看作该公司将有长期良好表现的确证。 高盛(Goldman Sachs)全球策略师科恩(Abby Joseph Cohen)说，股息当然是个好东西，但对他来说关键的是派息公司的业务形势，股息在更大程度是只是公司运营状况的一个信号。科恩说，投资者正在寻找公司对前景感到乐观的证据，而提高派息就是一个强有力的信号。
理论上的研究也支持这种观点。杜克大学布拉夫(Alon Brav)等几位教授近期联名发表的一篇报告中称，对400多位管理人士的调查发现，他们普遍将派息看作传达管理层对公司前景充满信心的一种途径。由于公司管理人士不愿下调股息，因此，当他们对前景更加看好时，股息自然也会继续上调。 除了美国运通、埃克森美孚以及维亚康姆之外，高盛分析师还指出，Sunoco和联合技术(United Technologies)两家公司现金流和收益强劲，因此可能很快就会宣布上调股息。而ISI的分析师团队则指出，百事公司(PepsiCo)、3M公司、维亚康姆以及Clear Channel Communications可能增加派息。还有一些分析师猜测，微软(Microsoft)可能会上调近期宣布的股息。
高盛分析师克莱门特(Michael Clement)说，2003年公司收益和现金流强劲为2004年增加派息奠定了基础。他还指出，提高派息通常要滞后于现金流改善，因为公司不愿在刚刚看到业务改善迹象时就上调股息。
有一点应该记住：为了在召开年度股东大会这段时间笼络人心，大多数公司都会选择在每年的第一和第二季度宣布派息或者上调股息。
