The Dow Jones Industrials (DJINDICES: ^DJI ) is well known for giving income investors the dividend increases they like to see. All 30 Dow stocks pay dividends, and many of them consistently increase their quarterly payouts year after year. Interestingly, though, the timing of those dividend increases throughout the year reflects uneven patterns. After American Express (NYSE: AXP ) and Caterpillar (NYSE: CAT ) pay out their recently declared higher dividends in the next couple of weeks, Dow investors could go quite a while without seeing another increase.
The patterns of Dow dividend stocks
In general, stocks that consistently make annual dividend increases fall into predictable patterns of behavior over the years. A large group of dividend stocks don't waste any time boosting their payouts, increasing dividends in the first quarter of the year. Another common alternative is to wait until the end of the year to ensure that a company's profits are up to par and then make the decision to raise the payout.
We've seen that pattern play out in recent quarters. During the first quarter of 2014, a record 1,078 companies tracked by S&P Dow Jones Indices made positive dividend moves, either increasing existing dividends or declaring new ones for the first time. By contrast, only 102 companies made dividend cuts or eliminated their payouts entirely. The dollar value of those increases and newly declared dividends added up to more than $19.7 billion.
Similarly, in the fourth quarter of 2013, 885 companies raised their dividends. That was actually down sharply from the 1,266 companies with dividend increases in late 2012, but that was likely because of the concerns about the fiscal cliff-induced tax hikes that raised the maximum dividend tax rate from 15% in 2012 to 20% in 2013.
If old patterns hold true, then we've likely seen the last dividend increases for a while in the Dow Jones Industrials. American Express announced its 13% dividend increase in May, although the ex-dividend date for that payment won't be until July 11, and the actual cash won't get paid out until early August. Similarly, Caterpillar just announced last week its latest dividend increase, boosting its payout by a dime per share or 17% with an ex-dividend date in mid-July and payment to be made August 20.
Of course, there are a few dividend stocks that haven't raised their payouts in a while, and they could choose to get back on the dividend-increase bandwagon. Intel has held steady with its dividends for eight straight quarters now, while DuPont has a five-quarter streak of unchanged payouts. As both consider major moves to bolster their growth, now could be a good time to consider rewarding shareholders for their patience.
What's more likely, though, is that Dow investors will simply have to accept a break from higher payments for a few months. By the time the holiday season approaches, more Dow stocks will start considering dividend increases once again.
Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.