Buying shares of American companies that pay large dividends is a good way to achieve a stable income in dollars. How to find such papers and what profitability can be expected?
Tax reform in the United States had a positive effect on the profits and free cash flow of companies.
Which opened up prospects for increasing dividends. Investors are investing in stocks that pay dividends to earn a steady income and be able to reinvest it in the purchase of additional securities.
Since many companies paying dividends are considered financially stable and mature, the prices of their shares may gradually increase over time, and shareholders will receive dividends from time to time, which is a win-win strategy for investors.
Who pays the longest and longest
To assess dividend yield, you should refer to popular information resources like Yahoo finance, where each share indicates the size of the future dividend, the ex-dividend date and other necessary indicators. There are also specialized resources, in particular, the site dividend.com, on which there are ratings of shares on dividend attractiveness, and many other useful analytical services.
When choosing stocks with an eye on investors’ dividends, profitability above 3% is of interest. From the S & P 500 index, four sectors now have a similar indicator: telecommunications, energy, real estate and utilities.
Telecoms show dividend yield of more than 7%, energy companies — more than 3%. Oil giants, including Exxon Mobil and Chevron, are not in a hurry to invest in new projects, bearing in mind the dramatic fall in energy prices in 2014. As a result, companies prefer to distribute the growing profits from the oil rally among shareholders, in particular by increasing dividends. The average profitability of the real estate sector is almost 4%.
Special mention deserves the utilities sector. Companies from this segment are little known to a wide range of investors, but show an average dividend yield of more than 3.5%. The utility sector is weakly correlated with the dynamics of a wide market, and this will suit investors who fear falling on stock markets. It is worth highlighting the shares of companies AES and FirstEnergy, which show the best dynamics against the background of a falling sector and, moreover, have a dividend yield above 4%.
The information technology sector traditionally shows the lowest dividend yield — about 1.2%. IT companies are mostly young, so they strive to spend their earnings on development. The exceptions here are IBM and Qualcomm, whose dividend yield is over 4%. IBM pays shareholders so much because of their age, and Qualcomm because of the business model, which involves selling licenses to other customers.
If you take large companies from the industrial index Dow Jones, the average yield on dividends is 2.5%. All companies from this indicator pay profit to shareholders. If you buy one share of all companies from the Dow Jones index, then you can get about $ 21 per quarter. On average, it’s about $ 0.7 per share.
The dividend policy may be different, but if a company starts paying dividends, it becomes a long-term solution with predictable and steady increases. In the US, many companies have been paying dividends for over 20 years now and increasing them.
There is even an exchange fund (ETF) that unites such companies. It is called SPDR S & P Dividend ETF (SDY), it includes 18 dividend papers, in particular such well-known companies like AT & T, Exxon Mobil, Coca-Cola, Procter & Gamble, and four representatives of the real estate sector. The average dividend yield of companies from this ETF is 4.34%. By the way, the Coca-Cola company has been paying dividends for over 40 years.