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Banks had been forced to cut their dividends to preserve cash after the financial crisis that peaked in September 2008, when the industry was propped up by a $700 billion government bailout package.
RAISES OUTNUMBER CUTS 22 TO 1: The 677 dividend increases compared with 510 in the first quarter of 2011. They included such household names as Colgate-Palmolive Co., Staples Inc. and Wal-Mart Stores Inc. There were decreases in the quarter by 31 of the approximately 7,000 that report dividend information to S&P Indices, including Frontier Communications Corp. and News Corp. The nearly 22-to-1 ratio of positive to negative actions made it the best first quarter for dividends since 2007, the year before the market crumbled. YIELDS STILL SOLID: The dividend yield measures annual payouts to shareholders against a company's stock price. Yields decreased to 2.6 percent at the end of the first quarter from 2.8 percent at the end of December. That's because the yield automatically becomes a smaller percentage as a stock price rises. The current average yield is still relatively high, says S&P senior analyst Howard Silverblatt.
HISTORY OF CONSECUTIVE INCREASES: ATM maker Diebold Inc. raised its dividend for the 59th consecutive year
-- the longest such streak, according to Morningstar's Peters. Close on its heels is auto and industrial parts distributor Genuine Parts Co., which increased its dividend for a 56th straight year. TAX CHANGES LOOM: Dividends are set to be taxed as normal income again in 2013 unless Congress extends the current, historically low rate of 15 percent. Higher rates would make dividends less appealing to many investors, but wouldn't necessarily cause dividend stock prices to decline. With taxes also to rise on investment income, Peters doesn't think the dividend tax rate hike would have much of an impact on dividends. Tax policies over the years haven't dissuaded companies from paying dividends, he says, and rates will remain modest by historical standards.
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