Dividend Investors Will Be Living Large

Great news dividend investors: You're in for a fatter payday this year and probably in 2012 as well.

America's 500 largest publicly-traded companies, bolstered by record profits and flush with cash, are increasing their dividends at the fastest pace in seven years.

This should comfort faithful dividend investors who got burned in 2009 when the global economy went into a state of shock, forcing General Electric (GE) , Citigroup (C) and other corporate titans to slash their dividends.

On the flip side, it shows that big companies are still reluctant to hire anyone despite money piling up on their balance sheet following major cost-cuts to cope with the recession. The U.S. economy didn't add any jobs in August, leaving the unemployment rate stuck at 9.1%.

Year-to-date through Aug. 31, fully 243 -- nearly half of the companies on the S&P 500 -- have either increased or initiated a dividend payment, up from 175 during the first eight months of 2010 and a paltry 102 during the same eight months in 2009, S&P data shows.

Higher dividend are appearing across the board. Dow 30 component Verizon Communications (VZ) said Sept. 1 it would raise its dividend for a fifth straight year, pushing its annual payout up 2.6% to $2 a share.

Iron-ore miner Cliff Natural Resources (CLF) is doubling its yearly dividend to $1.12 a share, while diesel engine maker Cummins (CMI) is boosting its dividend by 52% for an annual payment of $1.60 a share. And then there's CF Industries (CF) : The fertilizer supplier quadrupled its annual dividend to $1.60 a share.

Howard Silverblatt, senior index analyst at Standard & Poor's, estimates investors will pocket $241 billion in dividend payments from S&P 500 companies this year, up from $205 billion in 2010 and $196 billion in 2009. He calculates 2012 dividend payments will be even fatter.

"Dividends are having a very good year," Silverblatt said in a phone interview. "The good news is we're on road to recovery. The bad news (for dividend investors) is you're not back to 2008."

Silverblatt said investor-dividend paychecks are up 13.1% since December 2010. That's still 8% less than 2008, when dividend checks totaled $248 billion.

"Dividend investors are still short," said Silverblatt, who surmises the difference will be made up by mid-2012 unless the economy slips into a double-dip recession.

So far this year, 226 companies have upped their dividend. Only four have cut theirs. That's in stark contrast to 2008 and 2009, when 140 companies either cut or suspended their dividends, withdrawing $59 billion in payments investors had been counting on, according to S&P data.

By S&P sector this year, consumer staples, health care and industrials are leading the pack in terms of dividend payouts.

Walgreen Co. (WAG) is a consumer staple that's raised its annual dividend for 10 straight years. So are PepsiCo (PEP) , Coca-Cola (KO) and Colgate-Palmolive (CL) .

-Matt Andrejczak; 415-439-6400; AskNewswires@dowjones.com

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