WSJ’s Zweig: Companies Should Keep the Dividend Flow Coming

Monday, 31 Dec 2012 08:50 AM

By Dan Weil

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Corporations have offered their shareholders a flood of dividends this year, and they should keep the spigots open, says Wall Street Journal columnist Jason Zweig.

“This could be just the beginning of a long-term change in the way companies treat cash and their outside shareholders,” he writes. “If it continues, investors will end up vastly better off than they are now.”

In 2012, regular dividends paid by companies in the Standard & Poor's 500 Index will total a record $281 billion, S&P Dow Jones Indices estimates. That’s up 17 percent from last year, 13 percent from the prior high in 2008, and it doesn’t even include dividends pushed up to this month from January.

Editor's Note: The Final Turning Predicted for America. See Proof.

In the bull market of the 1980s and 1990s investors were happy to own stocks that paid no dividends, because returns were quite attractive without them. But the environment has changed.

"Investors are saying, 'If you want me to take the inherent risk of owning an equity, then I want a meaningful cash dividend to compensate me for that risk,"' Lawrence Stranghoener, CFO of fertilizer supplier Mosaic, tells The Journal.

University of Pennsylvania Professor Jeremy Siegel is a staunch advocate of dividends.

A whopping 97 percent of the S&P 500’s total return from 1926 through 2008 came from reinvested dividends, according to the calculations of money management firm WisdomTree based on Siegel’s research.

Editor's Note: The Final Turning Predicted for America. See Proof.

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