My brother and I were having a discussion last night regarding stocks. He held that virtually no company issues dividends any longer to their shareholders, choosing rather to invest entirely in capital improvements and acquisitions.
Now granted, IANAStockholder but if this is the case I have to admit it slipped by my attention in a pretty slick manner. I knew just where to get the real skinny on all this.
Thanks in advance…
Many companies still give dividends. I don’t know of many of the newer “tech” companies that give dividends, but lots of the older and fortune 500 companies still do.
If a company isn’t making any money or is still trying to expand rapidly there isn’t a lot of money left over to give to shareholders.
Things like reits and utilities pay dividends
Your brother is full of baloney. There are plenty of companies that issue dividends. Among the relatively new technology companies dividends are rare, but that’s only one segment of the market.
… because profits are rare.
If you want to figure out how many companies still pay dividends, first limit your sample to ones that have profits to distribute.
Most closely held private companies that are profitable pay dividends.
I still get dividend checks every quarter from GM.
And I get them from IBM.
And my dad gets them from Ford.
looks like what everyone has been saying is true. the 3 companies we’ve named so far are older, fortune 500 companies. And unlike the new tech co’s, they’ve still got profit to share.
I still get them from BNA. (By no means Fortune 500, a D.C.-based closely-held news and publishing company.) Or at least I did; we’re selling it all to make the down payment on our house in a month.
–Cliffy
I agree that many companies pay dividends, but, my understanding is that they are not as widely distributed as in the past.
The reason for this, according to what I have heard, is that dividends are taxed as ordinary income, whereas increases in share price are taxed at lower capital gains rates. So it’s better for shareholders if companies return earnings to investors by other means, such as stock buy-backs.
(Any finance gurus out there, feel free to correct me!)
You guys are my heroes. Now I just have to wait for my brother to get back from out of town so I can lay the truth before him…
Dividends are more prevalent in some industries than in others, and older, more established companies are more likely to pay dividends. They’ve been kind of out of fashion in the last few years, as companies preferred to plow every dime back into further development. Not only tech companies, either. Starbucks doesn’t give dividends - they’re still too busy using the money to open new stores.
Add to the list that Verizon pays dividends, Citigroup pays dividends, Exxon pays dividends …
In fact, most of the Dow-Jones industrials pay dividends, since some people still use various “beating the Dow” strategies involving ranking them by their dividend yields. Without researching, I suspect that MSFT is the only current Dow stock that doesn’t pay dividends (INTC pays small dividends). There can’t be more than 1 or 2 more.
I suspect that with a slowed-down economy, profitable companies may start issuing dividends as investors start paying more attention to them.
Looking at the components of the Dow Jones Industrial Average:
Alcoa: Annual dividend of $0.60
GE: Annual dividend of $0.64
Johnson and Johnson: Annual dividend of $0.72
Microsoft: No dividends
American Express: Annual dividend of $0.32
GM: Annual dividend of $2.00
JP Morgan Chase & Co.: Annual dividend of $1.36
Proctor and Gamble: Annual dividend of $1.52
Citigroup: Annual dividend of $0.64
Honeywell International: Annual dividend of $0.75
McDonald’s: Annual dividend of $0.21
AT&T: Annual dividend of $0.15
Caterpillar: Annual dividend of $1.40
Hewlett Packard: Annual dividend of $0.32
3M: Annual dividend of $2.40
United Technologies: Annual dividend of $0.90
Du Pont: Annual dividend of $1.40
IBM: Annual dividend of $0.56
Phillip Morris: Annual dividend of $2.32
Wal-Mart: Annual dividend of $0.28
Walt Disney Company: Annual dividend of $0.21
Intel: Annual dividend of $0.08
Merck: Annual dividend of $1.40
Exxon Mobil Corporation: Annual dividend of $0.92
Eastman Kodak: Annual dividend of $1.76
International Paper: Annual dividend of $1.00
Boeing: Annual dividend of $0.68
Home Depot: Annual dividend of $0.16
Coca-Cola Company: Annual dividend of $0.72
SBC Communications: Annual dividend of $1.02
29/30 pay dividends. Just in case you want to rub it in to your brother.