Investors And Financial Execs Agree Dividends Are On The Rise

Investors and Financial Execs Agree: Dividends Are On the Rise
In a​ recent study released by Boston-based investment manager, Eaton Vance, senior finance executives at​ dividend-paying American corporations agreed that stocks that pay dividends are growing in​ appeal .​
The nationwide survey of​ executives from all major corporate sectors also projected long-term dividend growth .​
The survey, conducted by Penn, Schoen & Berland Associates, Inc., revealed that 47 percent of​ finance executives anticipate dividend growth to​ continue to​ outpace earnings growth in​ 2018 .​
These projections dovetail with research by Standard & Poor's, which found that dividends rose faster than corporate earnings over the past year .​
Duncan Richardson, executive vice president and chief equity investment officer of​ Eaton Vance remarked, With strong balance sheets and cash flows, American companies have the means and motivation to​ continue to​ increase dividends.
How long is​ this trend likely to​ continue? Of executives who believe dividends will continue to​ outpace earnings, a​ majority (60 percent) expect the trend to​ last for one to​ two years .​
An additional 25 percent anticipate the trend will last up to​ five years .​
However, the duration of​ this trend may depend on whether Congress extends the current reduced tax rate on dividends .​
According to​ Mr .​
Richardson, Businesses may not continue increasing their dividends if​ the tax cut extensions fail to​ go through and dividends once again are taxed at​ a​ higher rate .​
Regardless of​ the possible extension to​ current tax act provisions, the important takeaway is​ companies are increasingly returning more to​ investors in​ the form of​ dividends, said Mr .​
Richardson .​
As many dividend-paying companies use excess cash to​ increase dividends, six out of​ seven finance executives polled said they consider a​ company's track record of​ increasing annual dividends as​ a​ way of​ displaying shareholder friendly behavior .​
Furthermore, four out of​ five believe a​ firm's dividend growth rate can give investors confidence in​ the company's projected long-term growth potential .​
Investors who were polled last year in​ Eaton Vance's sixth annual investor survey agreed with these sentiments .​
a​ majority of​ investors polled held a​ very positive view of​ companies that pay dividends (78 percent), seeing them as​ predictable cash generators and viewing dividends as​ a​ sign of​ financial strength .​
There has been a​ significant shift in​ investor preference from an​ emphasis on growth investing towards a​ more value-oriented conservative investment style, said Mr .​
Richardson .​
In the 1990s, investors preferred companies that offered buybacks-which increase reported earnings per share-over dividends .​
As the results of​ the Eaton Vance study reveal, a​ majority of​ polled individual investors (57 percent) now say they prefer regular quarterly dividends over stock buybacks (23 percent) or​ special dividends (8 percent) .​
According to​ Mr .​
Richardson, Dividends have returned to​ popularity, and value investing has emerged from the doghouse.
Eaton Vance Corp .​
is​ a​ Boston-based investment management firm whose stock trades on the New York Stock Exchange under the symbol EV .​
Eaton Vance and its affiliates managed over $113.3 billion in​ assets as​ of​ January 31, 2018, for more than 100 investment companies, as​ well as​ individual and institutional accounts, including those of​ corporations, hospitals, retirement plans, universities, foundations and trusts.
Penn, Schoen & Berland Associates, Inc .​
is​ a​ Washington, D.C.-based full-service strategic polling and market research firm.
Before investing in​ any Eaton Vance Fund, prospective investors should consider carefully the Fund's investment objectives, risks, and charges and expenses .​
The Fund's current prospectus contains this and other information about the Fund and is​ available through your financial advisor .​
Read the prospectus carefully before you invest or​ send money.

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