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Tokyo Markets Close in:

need to know
Disney's ESPN woes undercut 'Star Wars' gain
U.S. stocks end flat as oil continues to slide
SolarCity shares plunge more than 20%
Apple CEO Cook’s deleted Super Bowl tweet
Google CEO Pichai gets $199 million in stock
What to expect from Whole Foods earnings
Sears warns on sales, to speed up closures

The sad truth of why retirement
is a myth

What to know before buying Beyoncé tickets

S.F. real estate looks like it did before dot-com crash
Every major city in the world, in one map

Americans quitting their jobs hit a nine-year high
NFIB survey hints wage gains are fleeting
Job openings are second highest on record

Recipe for less boring Oscar speeches

How to get mortgage approved: hope for sunny day

Can oil get so cheap that it won’t pay to extract it?
Oil sinks under $29 as EIA lowers price outlook
Barron’s Buzz: How low can the price of oil go?

99 Cent Gas May Be on Its Way
99-cents-a-gallon gas may be on its way: 24/7 Wall St.

Is the gold rally the real deal or ‘fool’s gold’?
Teen can keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Gold futures stretch win streak to five sessions

Why is everyone freaking out about ‘CoCos’?
Convertible bonds are alluring as stocks fall
 
Deutsche Bank co-CEO says bank is ‘rock solid’
Deutsche may buy back billions in debt: FT
Why the selloff in European banks is ominous

This stock market has been Europe’s best in 2016

Strategists are arguing that stocks need a true purge

A strand of Lennon’s hair is selling for $12,000

White House forecasts decade-best economic growth
Obama proposes $4.1 trillion federal budget

Five questions that Janet Yellen must answer
Yellen may say goal is not to slow the economy
Fed: Too white, too male, too many bankers?
Expansion won’t die of old age: S.F. Fed study

Facebook, Amazon are the keys to tapping this market
French regulator threatens to fine Facebook
India bans Facebook’s free Internet service


Europe’s battles: migrants, ‘Brexit’ and ECB
German output, exports drop in December
Roubini: Welcome to the New Abnormal


This has been the No. 1 car in America for decades
How far can you get on $50 in gas?


/conga/frontpage.html 367510

Markets »

127.74MDow Volume:
Avg Vol: 130.29M
Unchanged
156
Decliners
4273
Advancers
2073
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,014 -13 0.08%
Nasdaq
/quotes/zigman/12633936/realtime 4,269 -15 0.35%
S&P 500
/quotes/zigman/3870025/realtime 1,852 -1 0.07%
GlobalDow
/quotes/zigman/629063/realtime 2,081 -3 0.16%
Gold
/quotes/zigman/33772884/delayed 1,192 -7 0.58%
Oil
/quotes/zigman/2260836/delayed 28.42 +0.48 1.72%
FTSE 100
/quotes/zigman/3173262/delayed 5,632 -57 1.00%
DAX
/quotes/zigman/2380246/delayed 8,879 -100 1.11%
CAC 40
/quotes/zigman/3173214/delayed 3,998 -69 1.69%
FTSE MIB
/quotes/zigman/1482176/delayed 15,913 -528 3.21%
IBEX 35
/quotes/zigman/2759620/delayed 7,928 -195 2.39%
Stoxx 600
/quotes/zigman/2380150/delayed 309 -5 1.58%
Asia Dow
/quotes/zigman/6959860/realtime 2,461 -10 0.41%
Nikkei 225
/quotes/zigman/5986735/delayed 16,140 +55 0.34%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,021 -266 1.10%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 0.00 0.03%
Yen
/quotes/zigman/16008150/realtime/sampled 114.89 -0.23 0.20%
Pound
/quotes/zigman/16008140/realtime/sampled 1.45 0.00 0.07%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.07%
DXY Index
/quotes/zigman/1652083/delayed 96.03 -0.03 0.03%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.28 0.00 0.00%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.73 0.00 0.10%
German 10y
/quotes/zigman/15866409/realtime 0.24 0.00 0.00%
Italy 10yr
/quotes/zigman/15866497/realtime 1.68 0.00 0.00%
Spain 10yr
/quotes/zigman/15866444/realtime 1.79 0.00 0.00%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.42 0.00 0.00%
Japan 10yr
/quotes/zigman/15866525/realtime -0.01 +0.01 49.34%
Crude Oil
/quotes/zigman/2260836/delayed 28 +0 1.72%
Gold
/quotes/zigman/33772884/delayed 1,192 -7 0.58%
Corn
/quotes/zigman/25518691/delayed 361 -1 0.28%
DJIA F
/quotes/zigman/48241424/delayed 15,958 -1 0.01%
S&P F
/quotes/zigman/43106711/delayed 1,850 +1 0.07%
Silver
/quotes/zigman/32655632/delayed 15 0 1.06%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 99.54 -0.21 -0.21%
AAPL /quotes/zigman/68270/composite 94.99 -0.02 -0.02%
GOOG /quotes/zigman/59527964/composite 678.11 -4.63 -0.68%
BAC /quotes/zigman/190927/composite 12.20 -0.07 -0.57%
C /quotes/zigman/5065548/composite 37.51 -0.30 -0.79%
F /quotes/zigman/264304/composite 11.35 -0.24 -2.07%
T /quotes/zigman/398198/composite 36.65 -0.46 -1.24%
BP /quotes/zigman/247026/composite 28.95 -0.97 -3.24%
GE /quotes/zigman/227468/composite 28.28 0.11 0.39%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
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World News from MarketWatch

Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/245568/composite DIS+0.22%
  • /quotes/zigman/13139813/composite SCTY-5.69%
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  • /quotes/zigman/93928/composite PSEC-7.39%
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The Hidden Appeal of Dinky Dividends

Don’t scoff at stocks with dinky dividend yields of 1% or so. Some of them may hold the key to handsome total returns in coming years.

The broad case for dividend-paying stocks rests on surging demand for yield, combined with a tight supply of it. Over the next 20 years, as the baby boomers retire, the percentage of the U.S. population the age of 65 and up will double, according to the Census Bureau. Many investors will look to convert savings into income by purchasing investments with cash yields.

Meanwhile, America’s core “Fed funds” interest rate has sat near zero since December 2008. That’s designed to stimulate the economy, but it has also served to collapse investment yields.

Consider: A retiree who puts $1 million into 10-year U.S. Treasury notes, which hit a record low yield Thursday, generates a yearly income of about $16,000, versus an average $62,000 since 1953. Treasury coupons, unlike stock dividends, don’t grow.

The obvious response for stock buyers is to scoop up shares with high dividend yields, but there are two problems with that approach now. First, it has already worked too well. Last year, a simple strategy of selecting S&P 500 stocks with high dividend yields returned 18.5%, the highest return of more than 30 strategies tracked each year by Bank of America Merrill Lynch.

Second, there’s at least some chance that dividend taxes will jump after this year, when a 15% rate cap is set to expire (see “Preparing for a Dividend Tax Hike”). It’s unclear whether higher taxes would reduce long-term demand for high-yield stocks, but it could spook investors in the short term.

Savita Subramanian, a stock strategist at BofA, recommends shifting to a different dividend strategy: Rather than simply targeting high-yield stocks, favor those with potential for payment growth, even if their current dividend yields are modest.

That approach offers some advantages. Stocks with modest yields are less likely to be sold off on fears of a tax hike. And ones with fast dividend growth tend to be thriving companies, as opposed to some high-yielders, whose prices are low because their growth prospects have dimmed.

It might seem counterintuitive to react to today’s low yields by seeking out stocks with dividend yields of 1% or so. But if a company increases its dividend by 15% a year, payments to investors double every five years — and share prices often rise, too. Plenty of companies have room for such increases, judging by high levels of corporate cash and low spending on dividends as a percentage of profits.

Ms. Subramanian recently ran a screen for potential dividend growers. Among the search criteria: limited debt, stable earnings and high free cash flow relative to dividend spending. Below are 12 of the companies the screen produced.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 15)

View all Comments »
    • Hi Keep up with the excellent posts. Thanks

    • Dividends don’t matter: on a stock’s ex-dividend date, the exchange lowers the stock price by the exact amount of the cash distribution–there is no gain. For example, Merck (MRK) sells for $37.50 and pays a quarterly dividend of $0.42. On the ex-dividend date, the NYSE will reduce the stock’s price by $0.42 to $37.08. Shareholders will then own two separate assets: $37.08 in stock and $0.42 in cash. Their wealth will not have changed at all.

      From the accountant’s point of view, the company’s book value will have declined by exactly $0.42 per share. That’s $0.42 per share that the company will not have for future investments, debt reduction, capital improvements, or stock buybacks.

      In sum, dividends don’t increase your return when stocks go up; dividends don’t cushion the blow when stocks go down; and dividends don’t pay you to wait when stocks go nowhere. A dividend payment is merely the company giving you back your own money–it’s a return of capital, even if the payment is not taxed as such.

    • Okay, let’s keep it civil, folks.

    • For that matter why not choose stocks that have dropped 20 or 30 % in value. They have an excellent chance of increasing in value and beating any combination of low dividends and growth. Then again they just might continue to lose value. A dumb solution to a senseless premise.

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MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
Investor Alert

Tokyo Markets Close in:

need to know
Disney's ESPN woes undercut 'Star Wars' gain
U.S. stocks end flat as oil continues to slide
SolarCity shares plunge more than 20%
Apple CEO Cook’s deleted Super Bowl tweet
Google CEO Pichai gets $199 million in stock
What to expect from Whole Foods earnings
Sears warns on sales, to speed up closures

The sad truth of why retirement
is a myth

What to know before buying Beyoncé tickets

S.F. real estate looks like it did before dot-com crash
Every major city in the world, in one map

Americans quitting their jobs hit a nine-year high
NFIB survey hints wage gains are fleeting
Job openings are second highest on record

Recipe for less boring Oscar speeches

How to get mortgage approved: hope for sunny day

Can oil get so cheap that it won’t pay to extract it?
Oil sinks under $29 as EIA lowers price outlook
Barron’s Buzz: How low can the price of oil go?

99 Cent Gas May Be on Its Way
99-cents-a-gallon gas may be on its way: 24/7 Wall St.

Is the gold rally the real deal or ‘fool’s gold’?
Teen can keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Gold futures stretch win streak to five sessions

Why is everyone freaking out about ‘CoCos’?
Convertible bonds are alluring as stocks fall
 
Deutsche Bank co-CEO says bank is ‘rock solid’
Deutsche may buy back billions in debt: FT
Why the selloff in European banks is ominous

This stock market has been Europe’s best in 2016

Strategists are arguing that stocks need a true purge

A strand of Lennon’s hair is selling for $12,000

White House forecasts decade-best economic growth
Obama proposes $4.1 trillion federal budget

Five questions that Janet Yellen must answer
Yellen may say goal is not to slow the economy
Fed: Too white, too male, too many bankers?
Expansion won’t die of old age: S.F. Fed study

Facebook, Amazon are the keys to tapping this market
French regulator threatens to fine Facebook
India bans Facebook’s free Internet service


Europe’s battles: migrants, ‘Brexit’ and ECB
German output, exports drop in December
Roubini: Welcome to the New Abnormal


This has been the No. 1 car in America for decades
How far can you get on $50 in gas?


/conga/frontpage.html 367510

Markets »

127.74MDow Volume:
Avg Vol: 130.29M
Unchanged
156
Decliners
4273
Advancers
2073
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,014 -13 0.08%
Nasdaq
/quotes/zigman/12633936/realtime 4,269 -15 0.35%
S&P 500
/quotes/zigman/3870025/realtime 1,852 -1 0.07%
GlobalDow
/quotes/zigman/629063/realtime 2,081 -3 0.16%
Gold
/quotes/zigman/33772884/delayed 1,192 -7 0.59%
Oil
/quotes/zigman/2260836/delayed 28.42 +0.48 1.72%
FTSE 100
/quotes/zigman/3173262/delayed 5,632 -57 1.00%
DAX
/quotes/zigman/2380246/delayed 8,879 -100 1.11%
CAC 40
/quotes/zigman/3173214/delayed 3,998 -69 1.69%
FTSE MIB
/quotes/zigman/1482176/delayed 15,913 -528 3.21%
IBEX 35
/quotes/zigman/2759620/delayed 7,928 -195 2.39%
Stoxx 600
/quotes/zigman/2380150/delayed 309 -5 1.58%
Asia Dow
/quotes/zigman/6959860/realtime 2,461 -10 0.41%
Nikkei 225
/quotes/zigman/5986735/delayed 16,140 +55 0.34%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,021 -266 1.10%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 0.00 0.03%
Yen
/quotes/zigman/16008150/realtime/sampled 114.89 -0.23 0.20%
Pound
/quotes/zigman/16008140/realtime/sampled 1.45 0.00 0.07%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.07%
DXY Index
/quotes/zigman/1652083/delayed 96.04 -0.02 0.02%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.28 0.00 0.00%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.73 0.00 0.10%
German 10y
/quotes/zigman/15866409/realtime 0.24 0.00 0.00%
Italy 10yr
/quotes/zigman/15866497/realtime 1.68 0.00 0.00%
Spain 10yr
/quotes/zigman/15866444/realtime 1.79 0.00 0.00%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.42 0.00 0.00%
Japan 10yr
/quotes/zigman/15866525/realtime -0.01 +0.01 49.34%
Crude Oil
/quotes/zigman/2260836/delayed 28 +0 1.72%
Gold
/quotes/zigman/33772884/delayed 1,192 -7 0.59%
Corn
/quotes/zigman/25518691/delayed 361 -1 0.28%
DJIA F
/quotes/zigman/48241424/delayed 15,955 -4 0.03%
S&P F
/quotes/zigman/43106711/delayed 1,849 +1 0.05%
Silver
/quotes/zigman/32655632/delayed 15 0 1.06%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 99.54 -0.21 -0.21%
AAPL /quotes/zigman/68270/composite 94.99 -0.02 -0.02%
GOOG /quotes/zigman/59527964/composite 678.11 -4.63 -0.68%
BAC /quotes/zigman/190927/composite 12.20 -0.07 -0.57%
C /quotes/zigman/5065548/composite 37.51 -0.30 -0.79%
F /quotes/zigman/264304/composite 11.35 -0.24 -2.07%
T /quotes/zigman/398198/composite 36.65 -0.46 -1.24%
BP /quotes/zigman/247026/composite 28.95 -0.97 -3.24%
GE /quotes/zigman/227468/composite 28.28 0.11 0.39%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
Please log in to view your watchlist
MarketWatch Portfolio

World News from MarketWatch

Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/245568/composite DIS+0.22%
  • /quotes/zigman/13139813/composite SCTY-5.69%
  • /quotes/zigman/118681/composite TSLA+0.18%
  • /quotes/zigman/93928/composite PSEC-7.39%
  • /quotes/zigman/217978/composite APC-7.02%
X
Powered by StockTwits
Link to MarketWatch's Slice.

As of July 2, 2013, the SmartMoney content you loved now lives on MarketWatch.

MarketWatch will continue to provide the same important news and information you rely on every day. And, as a MarketWatch user, you will be able to enjoy:

  • Personalized news and quote email alerts
  • Editorial e-newsletters about personal finance, mutual funds and market-specific coverage
  • Premium newsletters by our market experts
  • Games, such as Virtual Stock Exchange and Beat the Darts
  • Free WSJ.com registration