Banks Raising Dividends Is A Good Sign

High yields lure investors across board, including seniors. Big banks such as JP Morgan Chase and Wells Fargo are raising their dividends, a welcome sign of recovery in a besmirched industry, and smaller publicly traded banks also are spreading the increased profits around. The bankers say their boards have gained confidence in the slowly improving economy and are more open to raising dividends as long as earnings and asset quality improve. Banks, like utilities, are known as steady payers of dividends, and the industry's recent partial recovery in the stock market has been driven in part by the lure of dividends with yields higher than the interest rates on bank deposits and taxed at 15 percent, below regular income.

Dividend investing has been on the rise across most sectors, according to the research firm Five Star Equities. Stocks that pay dividends gained 8.3 percent last year versus 2.1 percent for the Standard & Poor's 500 Index. This year, S&P 500 companies are on pace to pay out a record $277 million in dividends, the firm said. "Seniors and people living on fixed incomes are looking for returns to live off of," said Christopher Martin, chief executive officer of Provident Financial. "Where they used to be able to do that with money in the bank, now they have to reach out to the equity market."

Source: NorthJersey.com

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