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Not Everyone Loves Dividends: Thus Guy’s Argument is Worth Hearing

Jeff Bailey

We at YCharts write often and with verve, I believe, on the subject of dividends, both because our readers have shown a strong interest in the topic -- especially during this period of super-low interest rates, which have upended income investors – and because so much research suggests that strong companies that pay a rising dividend are, over time, excellent investments.

But there’s always room for another point of view, and William Baldwin, former editor and now a columnist at Forbes, has for some time been leading the anti-dividend, pro-buybacks team with smart and persuasive columns. His latest includes love-of-dividends in a list of Six Stupidest Economic Theories. Baldwin strongly prefers stock buybacks for tax and other reasons, and he’s worth a read on that, as well.

Of course, dividend paying and stock buybacks often go hand-in-hand, and essentially combining the percentage reduction in shares outstanding with the dividend yield results in something known as total yield, or, on YCharts, Net Payout Yield. Exxon’s (XOM), for instance, is about 7.7% and most of it’s made up of buybacks.

XOM Dividend Yield Chart

If, after reading what Baldwin has to say, you still want dividend income, then YCharts has you covered. We recently completed a ten-part series on the S&P 500 Dividend Arisocrats (companies that have increased their payout annually for at least 25 years) with the highest rate of dividend growth.

We also published a primer on finding dividend stocks in 2013. We analyzed the combination of dividend growth and low volatility in producing stock market winners. And, in a partial tip-of-the-hat to Baldwin, we’ve written on total yield, or what the YCharts database calls Net Payout Yield.

Here’s a list of the S&P 500 using the YChart Stock Screener to rank them on Net Payout Yield.

Here’s a look at some major stocks – Intel (INTC), Lowe’s (LOW), Becton Dickinson (BDX), Costco (COST), Johnson & Johnson (JNJ) and Oracle (ORCL) – and their Net Payout Yield.

INTC Net Payout Yield TTM Chart

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.

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