In a world of ultra-low bond yields and aging populations, stocks that sport healthy dividend yields have been in high demand.
Bespoke Investment Group observes that 315 stocks in the S&P 500 have a higher dividend yield than the five-year U.S. Treasury, 234 equities have bigger payouts than the 10-year, and 131 have larger yields than the 30-year.
Meanwhile, Pavilion Global Markets notes that American companies that have actively returned cash to shareholders have – by and large – outperformed their peers during this bull market.
"Since the start of the rally in 2009, the S&P 500 Dividends Aristocrats, which focuses on companies that consistently increase their dividends, advanced 306 per cent," write strategists Pierre Lapointe, Alex Bellefleur, and Francois Boutin-Dufresne. "This compares with a gain of 253 per cent for the S&P 500 for the period."
And although earnings of S&P 500 companies are expected to contract in the first two quarters of 2015 – the much-ballyhooed "profit recession" – investors can sleep soundly without fear that their distributions from U.S. companies will wane or remain stagnant.
"Even without strong earnings growth over the past few years, companies have increased their dividends and are expected to continue to do so," the three strategists wrote.
The oil-induced shrinkage in earnings hasn't prompted analysts to pare their forecasts for dividends per share in 2015:
According to Pavilion's strategists, the U.S. dividend payout ratio is close to a 140-year low, and remains far below levels seen in Asia and Europe, but has been on a steady uptrend since the end of 2011.
The outlook for Canadian dividends is considerably more cloudy, thanks to the collapse in commodity prices.
In mid-April, CIBC World Markets economist Nick Exarhos pointed out that dividend growth for the S&P 500 crushed that of the S&P/TSX composite over the past year through March. This is largely attributable to the higher weighting of energy companies on the benchmark Canadian index, many of which reduced their payouts to preserve financial flexibility during the sharp downturn in prices.
"With the fall in oil prices likely to squeeze Canadian corporate coffers more than cash-rich U.S. firms, dividend payouts in the S&P could continue to grow faster than on the TSX," he said.
The tax code in the United States, however, incents companies to repurchase shares rather than pay out dividends – and they've certainly been doing that in droves, as well. According to Deutsche Bank, S&P 500 companies have announced $256-billion (U.S.) in buybacks over the past three months, the highest tally on record.