Dividend payments are on track to set a record this year.
In the third quarter, payments increased 14 percent over the same quarter a year ago. All told, cash payments are expected to rise by 10 percent or more over last year’s record total, according to S&P Dow Jones Indices.
Dividends remain attractive even though the yield on the 10-year Treasury note has risen by a full percentage point since early May. That’s when speculation began to mount as to when the Federal Reserve might begin to scale back its $85 billion in monthly bond purchases. The central bank’s stimulus efforts pushed bond yields so low that it boosted the appeal of dividend paying stocks. Many economists now believe the Fed won’t reduce its bond purchases until December at the earliest.
Dividend growth should continue in the fourth quarter, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. He says that’s assuming the government reopens and doesn’t technically default on its debt as a result of a debt ceiling stalemate.