S&P 500 Offers Record Dividends In Q2: How To Tap With ETFs?

Dividends have been the consistent source of income for investors seeking regular returns during both bull and bear markets. According to a study, dividends accounted for an average 52% of the total returns over the past seven decades.

This is especially true as these stocks offer the best of both these worlds — safety in the form of payouts and stability in the form of mature companies that are less volatile to large swings in stock prices. The companies that offer dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.

Q2 Dividends Payout Hits Record

Overall, the S&P 500 companies declared a record $124 billion in dividend payouts during the second quarter, up 11% from $112 billion in the year-ago quarter. About 89 firms hiked their payouts versus 67 firms a year ago, while 332 have maintained their dividends versus 347 in the same period last year. Notably, 43 companies have retained the ‘aristocrat’ status of 25 years of consecutive dividend raises. This is primarily thanks to a strong economy, solid earnings, historic tax cuts and results from the second round of Federal Reserve stress tests.

Among the special attractions were Citrix Systems (CTXS - Free Report), which declared a dividend for the first time with a payout of 35 cents, and Dr. Pepper Snapple, which announced a special dividend of $103.75 due to merger activity. Lam Research (LRCX - Free Report), Hewlett Packard Enterprise (HPE - Free Report), Wynn Resorts (WYNN - Free Report), Ralph Lauren (RL - Free Report) and Starbucks (SBUX - Free Report) were among the firms that hiked dividend payouts.

The trend is expected to continue in the coming months as most large companies have huge cash piles on their balance sheet and are in a position to increase payouts to shareholders. Additionally, the new tax law encourages the companies to bring their overseas cash back home at much more reduced rates and distribute parts of it to their shareholders. Per Bloomberg, an additional 75 companies will boost dividend payouts this quarter.

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