Dividend lovers are having a great year.
Total worldwide dividend payments rose to $497.4 billion, a 12.9% year-on-year increase and a new all-time high.
Twelve different countries received record dividends, including France, Japan and the United States.
What’s behind the dividend bonanza?
Rising corporate profitability all over the world is the driving force. Total U.S. dividends recently hit a record $117 billion, according to Business Insider.
Sure, everybody loves fatter dividends, but also keep in mind dividend-paying stocks also perform better than non dividend-paying stocks.
Dividend payers — and especially dividend payers that have initiated a new dividend or raised their existing dividend — produced higher total returns than the S&P 500 and trounced stocks that don’t pay dividends.
That doesn’t mean dividend-paying stocks won’t go down in bear markets, but they have historically gone down less. Less risk and higher returns are a double dose of good news.
The stock market and the U.S. economy are still growing, but several emerging markets are suffering from some painful meltdowns.
No, I’m not talking about Venezuela, which is severely suffering an incomprehensible inflation rate of 200,000% and food shortages that have forced millions to flee the country.
Almost the entire emerging-market landscape is falling and falling fast, reports the Daily Nation.
As of Sept. 4, the MSCI Emerging Markets Index is down by 18% from its Jan. 26 high.
- Argentina: Interest rates have hit 31%, inflation is running at a 60% pace and the MSCI Argentina ETF is down 31% from its January high
- South Africa: Social unrest has reached deadly proportions, and the South African government is confiscating land without compensation
- Turkey: The Turkish lira has lost 31% of its value in just the last 90 days over political instability and rampant inflation. The iShares MSCI Turkey ETF is down 70% from its high
- Indonesia: The Indonesian stock market is at a 27-month low and down 29% from its January highs
- China: Chinese stocks have dropped into 20%-plus bear market territory and could get worse if more trade tariffs are slapped on its exports into the U.S.
Similar stock market losses can be found in Brazil, Russia, Italy, Greece, Chile, Vietnam and more.
That may want to make you flee the stock market, and that is exactly the reason why foreign dollars are stampeding into the U.S. stock market and the U.S. dollar.
The U.S. is the safe hiding spot for emerging-market investors.
For us, the smart move is to jettison companies doing lots of business in those emerging markets.
Stocks like China Mobile (NYSE: CHL) or Fidelity’s New Markets Income Fund (NASDAQ: FNMIX) are specifically what I’m referring to.
However to capture fresh income off the dividend bonanza look to big name payers who do a lot of their business here in the States.
Two that come to mind I like a lot are Kimberly-Clark (NYSE: KMB) and Johnson & Johnson (NYSE: JNJ).
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch