The 'D' Word
Until last week, all the droning on Wall Street was about the summer doldrums. But a big announcement from Microsoft has shifted the focus to a new "d" word: dividends.
The market's been spinning its wheels, and with price appreciation going nowhere, investors are keen on other ways to rake in cash. A fat handout like the $32 billion reward Microsoft is planning for its shareholders is one way. Yet, investors are ignoring the success of dividend-paying stocks and instead fretting over losses in the flashy tech sector and a slowdown in profit growth.
"Would you rather interview somebody who's got a real hot hedge fund or somebody who runs a coin-operated laundromat?" says Neil Hennessy, portfolio manager at Hennessy Funds in Novato, Calif. It's boring, he admits, but "you never see a going out of business sign on a coin-operated laundromat. That's how I look at dividend-paying stocks: People don't pay attention to them."
Maybe it's time to start.
See a calendar of earnings reports scheduled for the coming week.
See a calendar of economic reports scheduled for the coming week.
Stock prices for dividend-paying companies in the S&P 500 index are up 4.2% this year through the middle of July, while non-dividend payers are down 5%, according to Standard & Poor's. "This market has been choppy, and people feel better knowing that on a quarterly basis they'll get that check in the mail," says Tom Huber, manager of Baltimore-based T. Rowe Price Dividend Growth Fund.
More companies are expected to increase or initiate dividends. Last year's dividend tax cut gave investors a bigger incentive to own dividend-paying stocks. And with interest rates low, companies have less reason to hold cash on their books. Among larger companies, the dividend trend already is emerging: Of the 860 companies in the broad S&P 1500-stock index that pay dividends, 488 have increased their quarterly payout by a median of 11% this year, according to Merrill Lynch.
"We think [dividend increases] are going to revert to the historical trend, in that they tend to rise in periods when the market is flat to down -- certainly this year, we're flat to down," says Joseph Lisanti, editor in chief of The Outlook, a newsletter from New York-based S&P, which has tracked dividends for the last 49 years. "Investors aren't making a bundle the way they did in the late '90s, and people are starting to value dividends more."
Dividends can be a real boon to investors' portfolios, especially when stock-price appreciation is less than stellar. Take the Alpine Dynamic Dividend Fund. The fund, ranked first among all equity-income funds by Lipper this year, is up 8.05% year to date. Of that gain, 3.61% is capital appreciation and the rest is dividend growth. Either way, it's seriously outperforming the S&P 500-stock index, which is down 2.3% for the year.
Jill Evans, portfolio manager of the Alpine Dynamic Dividend Fund in Purchase, N.Y., says part of the fund's success is its diversification -- a policy investors should follow if they want to take advantage of better dividends so as not to get scorched on one poorly performing stock. Her fund also has a global reach, with about 20% of its stocks from overseas markets.
That's helped boost the fund's performance. In the United Kingdom, a 4% to 5% dividend payout is normal, whereas in the U.S., the average yield -- a measure of the cash paid to investors relative to stock price -- of S&P 500 stocks is 1.7%, she says.
Investors also should look for companies with long histories of dividend increases, or, if dividends were initiated more recently, consistent increases in the amount. Microsoft, for example, only recently started issuing dividends but twice already has increased the size of the payout.
Companies with long histories of dividend increases include Altria, which has increased its payout for at least 36 consecutive years, according to S&P. Procter & Gamble has increased its dividend at least 40 straight years, Anheuser-Busch at least 39, and McDonald's at least 27, according to S&P.
While other companies simply don't have the cash horde to raise dividends by the same magnitude as Microsoft did, they are making strides. In the first six months of the year, 895 companies (out of 7,000 tracked by S&P) increased their dividends, compared with 788 and 747 in the same periods of 2003 and 2002, respectively.
"You want to see a pattern where the board is eager to return some of the earnings to investors," says Mr. Lisanti. "It keeps individual investors happy, and they're a more stable base than institutions who flit in and out." He suggests investors read companies' annual reports to get a feel for their dividend history. If they are committed, the "CEO will usually prominently mention it," he says.
Though the Microsoft news prompted some speculation that stable tech companies like Intel and Cisco would come under pressure to do the same, don't bet the farm on it. Technological advances come rapidly in the sector and many heavyweights, as well as riskier or newer businesses, like to keep cash on hand for research and development, acquisitions or capital expenditures.
Finally, don't let high yields distract you from the broader picture. A healthy dividend is nice, but sometimes a yield looks high simply because the stock price is in the tank. Plus, if the company is struggling to make the payment or is neglecting growth opportunities because of it -- look elsewhere.
"Sometimes high dividends are unsustainable and companies are slighting the needed expenditures on capital and foregoing acquisitions," says John Carey, fund manager for Pioneer Equity Income Fund in Boston. Instead, investors should look at the payout ratio relative to its peers and avoid the outliers. "You want to be sure it's truly money they don't need for something else."
直到上周，华尔街还在抱怨今年夏天真是沉闷单调。然而，微软(Microsoft Corp., MSFT)的一项重大公告使人们的注意力转向了另一个词：股息。
迄今为止，市场一直在白费力气，而股票价格丝毫没有上涨的迹象，于是投资者们想方设法，另寻赚钱之道。微软打算向股东派发价值320亿美元的特别股息就是获利途径之一。但是，广大投资者对那些慷慨支付股息的公司视而不见，却对科技企业的亏损以及利润增长放缓感到忧心忡忡。
加利福尼亚州Hennessy基金的投资经理尼尔?亨尼西(Neil Hennessy)问道：“你是愿意会见一个拥有一只炙手可热的对冲基金的大人物，还是一个经营投币式自动洗衣店的小老板？“虽然亨尼西也承认经营自动洗衣店实在令人乏味，但“你从未看见哪家自动洗衣店歇业。我认为这就是人们对派息股票的态度：人们根本不予理睬“。
也许现在对股息加以关注的时候了。
标准普尔公司(Standard & Poor's)称，截至7月中旬，标准普尔500种股票指数成份股中派息股票今年以来上涨了4.2%，而那些未派息股票则下跌了5%。位于巴尔的摩的T. Rowe Price Dividend Growth基金的经理汤姆?休伯(Tom Huber)说：“市场一直动荡不安，因此投资者希望最好每个季度他们能通过邮件确认自己获得了股息。“
预计提高股息或开始派息的公司数量会上升。去年的股息税下调极大地鼓舞了投资者持有派息股票的热情。由于利率处于历史低点，企业没有以往那么多理由牢牢握著现金不放。美林公司(Merrill Lynch & Co., MER)称，大公司中提高股息的趋势已经日渐分明：在标准普尔追踪的1500家公司中有860家公司派息，其中488家今年上调季度股息的幅度中值为11%。
标准普尔公司的时事通讯The Outlook的主编约瑟夫?利萨蒂(Joseph Lisanti)认为，股息的走势将遵循历史趋势，即在市场停滞不前或萎靡不振时上升，而今年市场正是如此。他指出，投资者不再像上世纪90年代晚期那样大而化之了，他们如今开始重视股息了。标准普尔公司在过去49年里一直追踪公司股息状况。
股息对于投资组合来说可是个不折不扣的福音，特别是当股价涨幅不尽人意时。以Alpine Dynamic Dividend基金为例。该基金在Lipper今年的股票基金中排名第一，迄今为止上涨了8.05%，其中3.61%归于资本升值，其余则归于股息增长。该基金的表现远远好于标准普尔500指数，后者今年以来下跌了2.3%。
Alpine基金的投资经理吉尔?埃文斯(Jill Evans)说，该基金成功的部分原因是其投资组合多元化，那些希望利用股息上调的投资者应当加以效仿，以免被表现糟糕的股票拖累。该基金还涉足海外市场，其投资组合中约20%的股票来自国外市场。
上述因素提振了Alpine基金的业绩。埃文斯指出，在英国，4%至5%的股息率属于正常水平，而在美国，标准普尔500指数成份股的平均股息率（股息除以股价）只有1.7%。
投资者们还应当关注一贯上调股息的公司，或者那些虽然不久前才开始派息，但一直增加派息额的公司。以微软为例，该公司最近才开始派息，但已连续两次上调了派息额。
标准普尔公司称，一贯上调股息的公司有菲利普莫里斯集团公司(Altria Group Inc., MO)，该公司至少连续36年提高股息了。宝洁公司(Procter & Gamble Co., PG, 又名:宝硷公司)则至少连续40年上调股息，而安海斯公司(Anheuser-Busch Cos. Inc., BUD)和麦当劳(McDonald's Corp., MCD)增加股息的年头至少分别有39年和27年了。
虽然其他公司没有足够的现金储备，无法像微软那样大幅度提高股息，它们也还是很大方的。在今年前6个月里，在标准普尔追踪的7,000家公司中有895家提高了股息，而去年和前年同期的数字分别为788家和747家。
利萨蒂说：“你当然希望市场急于把部分收益回报给投资者，投资者会感到高兴，他们比进进出出的机构投资者要稳定得多。“他还建议投资者审查企业的年度报告，了解派息历史。利萨蒂指出，如果企业一贯乐于派息，CEO们通常会对此大书特书。
虽然微软此举不禁让人猜测像英特尔(Intel Corp., INTC)和思科系统(Cisco Systems Inc., CSCO, 简称：思科)这样的大公司将面临上调股息的压力，但是别作指望。科技业的技术进步可谓日新月异，因此无论是举足轻重的大公司，还是成立较晚的或是风险更大的公司，都喜欢把手头的现金用于研究和开发、收购以及资本支出。
还有一点，别让高股息率使你丧失了对大局的把握。丰厚的股息当然不错，但有时候股息很高只是因为股价太低。此外，如果企业派息困难，或是因此忽略了发展机会，那么就另寻目标吧。
波士顿Pioneer Equity Income基金的投资经理约翰?凯里(John Carey)说，有时候，较高的股息率无法维系，企业为此削减了必要的资本支出和收购。投资者应当关注派息率在同行中的水平，不受表象迷惑。凯里说，你得确定，股息是实实在在的，他们发放股息没有别的动机。
