Dividends growing on market

NEW YORK – The emerging leadership of dividend-paying stocks has some market watchers spotting a broader trend: With earnings growth on the decline, there’s renewed interest in what was once considered an old-fashioned investment.

Dividends – regular payments to shareholders out of a company’s retained earnings – have long provided a boost to total return, and now analysts say they could help drive the stock market higher. Since stocks struck their mid-April lows, the best performers have been in sectors with the fastest dividend-per-share growth in recent years, said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. Those with weaker dividend-per-share growth have lagged.

“Back in the old days, people bought stock for the dividends,” Kleintop said. “It’s only been in the last couple decades people focused more on stocks going up than what they paid in dividends. And now that may finally be reversing.”

Dividends’ popularity waned during the bull market, and the average equity yield for the Standard & Poor’s 500 struck an all-time low of 1.1 percent in 2000. The number of S&P companies offering dividends dropped from 470 in 1980 to just 351 in 2002. Now that number has climbed to 378, and the average yield is 1.9 percent.