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DJ Industrial Average companies to increase annual dividends by 8.4%


The Dow Jones Industrial Average‘s 30 component companies are expected to increase their annual dividend payout by 8.40% year-over-year and 2.18% from the previous quarter, according to a first-quarter 2012 survey by Dow Jones Indexes.

DJIA component companies’ USD107 billion expected dividend distribution for the 12 months beginning April 1, 2012, represents 37% of all indicated annual dividends (IAD) by US companies as measured by the Dow Jones US Index, a gauge that accounts for roughly 95% of the US equity market. (IAD is a forward-looking measure defined as a company’s most recently paid quarterly dividend multiplied by four.)
For the quarters ended 31 December, 2011 and 31 March, 2011, DJIA component companies paid USD104.7 billion and USD98.7 billion in IAD, respectively.
“As is the case with most information gleaned from Dow Jones Industrial Average’s component companies, this dividend data provides meaningful insight into the strategic outlook of bellwether US corporations,” says David Krein, Senior Director, Product Development and Analytics, at Dow Jones Indexes. 
Nine of the 10 largest dividend distributions in the US market – by total estimated payout – are DJIA component companies: AT&T, USD10.5 billion IAD, or USD1.76 per share; Exxon Mobil, USD9.1 billion, USD1.88; General Electric, USD7.2 billion, USD0.68; Pfizer, USD6.8 billion, USD0.88; Chevron, USD6.5 billion, USD3.24; Johnson & Johnson, USD6.2 billion, USD2.28; Microsoft, USD6.0 billion, USD0.80; Procter & Gamble, USD5.8 billion, USD2.10; and Verizon, USD5.7 billion, USD2.00.
Annually, AT&T, Exxon Mobil and General Electric – the top three payers – would account for 9.22% of all dividends paid by stocks included in the Dow Jones US Index.
Since the end of 2011’s fourth quarter, six DJIA companies have increased their per-share dividends: Cisco Systems, by 33.33%; JPMorgan Chase & Co., 20.00%; Pfizer, 10.00%; Wal-Mart Stores, 8.90%; Coca-Cola, 8.51%; and 3M Co., 7.27%. 
Compared with the Dow Jones US Index, Dow component companies’ dividend yield (IAD divided by market capitalisation) was higher by 60 basis points, or 2.55% vs. 1.95%. The DJIA companies’ five-year, weighted average-dividend-growth rate was 14.86%, compared with the Dow Jones US Index’s 26.30%.
“One of the market’s subtle truisms is that many investors track the DJIA for more than just its day-to-day pricing figures,” says Krein. “As we can see with the dividend information, there is much to be learned about the broad US market by mining The Dow’s component companies’ data for useful indications that enable investors to make informed decisions about their investment portfolios.”


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