FYI: Many companies in the S&P 500 continue to boost their dividends at a steady clip as payouts rose roughly 7.8 percent through this year's first quarter. Surging cash balances and rising after-tax cash flow suggest even higher dividends to come.
Trouble is, dividend increases haven’t been keeping up with stock price gains. As a result, that average dividend payer in the S&P 500 sports a 1.85 percent yield, according to multpl.com. 10-Year Treasuries, with yields around a percentage point higher, also aren’t capable of producing robust income streams.
That’s why preferred securities remain in favor. Danny Prince, head of iShares product consulting, notes that in the 11 years that the iShares U.S. Preferred Stock ETF (PFF) has been trading, its yield has never fallen below 5.0 percent. (The current trailing twelve-month yield on that fund is 5.61 percent). “They’re a really attractive source of income, relative to Treasuries,” says Prince.
Regards,
Ted
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