Dividend Payout Reflects the New Reality
08/02/2011 0 comments
With many energy and high tech stocks paying more and more dividends, the landscape of dividend payout percentages in S&P 500 has changed. In a recent article titled as Burned Before, Dividend Funds Diversify Beyond Same Old Sectors, author Sarah Morgan reported that many dividend stock funds have diversified their investment beyond financial sector concentration to other new sectors.
The following chart from the article shows the change:
It is interesting to see that now, consumer staple stocks (XLP) is the largest sector for dividend payout. With Energy (XLE) and technology (XLK) being very close to the second largest financial sector (XLY), investors are now more in favor of these two sectors.
This change bodes well to our long standing argument that
- technology companies, being one of the main beneficiaries of globalization, have better balance sheets and are now more shareholder friendly.
- resource (energy) companies will do well in the era of depleted natural and energy resources.
Dividend investors should also focus on dividend appreciation (rising dividend) instead of merely current dividend amounts (dividend hogs). The rising dividend approach will allow you to find more energy and technology companies. In fact, it will allow you to even consider those gold mining stocks (such as Newmont (NEM)) that have increased their dividends steadily recently. As gold price continues to rise, these stocks or ETFs (such as market vector gold mining stock GDX) might be worth a look.
See Retirement Income ETFs plan for portfolios using dividend and interest paying ETFs such as DVY, VIG, VYM.
Symbols: XLK, XLE, XLY, GDX, SPX, COMP, VIG, DVY, Dividend Investing, Retirement Investing
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