U.S. companies are responding to investors' frantic search for returns. Cisco Systems said last month that it will begin paying a dividend in fiscal year 2011, and Microsoft said it will increase its dividend by 23%, from $0.52 a year to $0.64.
Ten companies in the S&P 500 have initiated dividends so far this year, up from two in 2009 and five in 2008, says Howard Silverblatt, senior index analyst at S&P. "In general, investors are very hungry for income," Silverblatt says, noting that yields on the safest investments, like bank accounts or CDs, are extremely low. S&P 500 stocks currently return a little over 2%.
The dividend landscape has changed over the last few years, as financial firms, traditionally generous with their payouts, pulled back. Tech companies now pay 9.2% of the dividends provided by S&P 500 companies, and financials pay just 8.8%. In 2008, financial companies paid 20.5% of S&P 500 dividends, while tech companies paid 6.9%.
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