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Companies are realizing a little incentive might be necessary to win over hesitant investors.
A broad range of companies are now delivering the best payments to shareholders since the financial crisis, reports Christine Hauser of the New York Times.
Edward F. Keon, portfolio manager for Quantitative Management Associates, says management is beginning to think higher dividends yields "might be a way to a higher stock price and better benefits for shareholders over all."
Consider the difference in dividends paid out between 2010 and 2011, the amount rose from $205 billion to $240.6 billion. The largest payout since 2008 of $247.8 billion.
Data released by Standard & Poor's suggests dividends are on track to pay a record $252 billion in 2012.
Favorable track record
Thanks to market volatility and an uncertain economic future, dividend-paying companies were largely rewarded in 2011 as investors flocked to the perceived safety of dividend income. In doing so, investors helped to hike up stock values.
S&P 500 companies with high yields significantly outperformed low-yield or no-yield companies on the index. Toward the end of December, the top 100 highest dividend yield stocks on the S&P 500 were up an average of 3.7% before dividends. The 100 lowest-yielding stocks were down an average of 10%.
Business section: Investing ideas
So, which dividend stocks are worth a closer look?
For ideas, we collected data on insider transactions and identified a list of dividend champion stocks that have seen significant insider buying over the last six months.
Theoretically, insiders know more about their companies than anyone else. So, if they're using their own cash to buy the shares of their employers, you better pay close attention.
In case you haven't heard of the term, dividend champions are the companies that have managed to raise their dividend payments for 25+ consecutive year. It's a very exclusive list, and there are only about 100 companies that match this criteria.
These dividend stocks have a long history of raising payouts, and insiders seem optimistic on the outlook of these names -- do you agree with this bullish sentiment?
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
1. Cintas (Nasdaq: CTAS ) : Provides corporate identity uniforms and related business services in North America and Latin America, Europe, and Asia. Over the last six months, insiders were net buyers of 645,158 shares, which represents about 0.59% of the company's 109.69M share float.
2. Community Trust Bancorp (Nasdaq: CTBI ) : Operates as the holding company for Community Trust Bank, Over the last six months, insiders were net buyers of 43,738 shares, which represents about 0.34% of the company's 12.70M share float.
3. SJW (NYSE: SJW ) : Engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water. Over the last six months, insiders were net buyers of 34,500 shares, which represents about 0.24% of the company's 14.11M share float.
4. United Bankshares (Nasdaq: UBSI ) : Provides commercial and retail banking services and products in the United States. Over the last six months, insiders were net buyers of 9,025 shares, which represents about 0.02% of the company's 43.37M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Insider data sourced from Yahoo! Finance.