The Return of Financial Dividends

Dividends are slowly making a comeback, and they’re even returning to the financial sector. Thanks to the TARP program, many financials firms weren’t allowed to pay dividends, or they cut them down to a trivial amount.

The Financial Sector ETF ($XLF) just paid out its June dividend of 6.8 cents per share. That’s a 28% increase over the 5.3 cents from one year ago. This is still well below the peak when the XLF regularly paid out more than 20 cents every quarter.

Profits are returning and so are dividends. If all goes well, I think the XLF could pay out 30 cents per share this year. At $15, that’s a yield of 2% which is lower than many stocks. However, the XLF has the ability to increase its dividends at a rapid clip for the next few years.

Posted by on June 19th, 2012 at 10:39 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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