BOSTON (TheStreet) -- U.S. companies raised dividend payouts by $9.6 billion in the third quarter to keep hungry shareholders happy and attract those earning almost nothing on bonds.
That's chump change compared to dividend payouts of the past. And it comes at a time when the nation's companies are sitting on more cash than ever.
Dividend payout rates have historically averaged 52% of earnings per share, but are now running near all-time lows at under 30%, according to S&P Indices. Companies have "considerable room to increase payments," S&P Indices says. But they won't.
And it's not as if U.S. companies need more cash. At the end of the second quarter, they held a record $2.1 trillion, up 4.5% from the first quarter and almost 50% from the end of 2008, according to the Federal Reserve.S&P 500 Index companies, excluding financial firms and utilities, held $976 billion in cash on June 30, the 11th consecutive quarterly record for cash balances. That amount represents 72 weeks of net income. Financial giant JPMorgan Chase (JPM) has the biggest cash holdings among S&P 500 companies, with $414 billion as of June 30. It has a projected dividend yield of 3.24%. Yet, technology companies are among the largest cash hoarders. Microsoft (MSFT), the world's No. 1 software maker, is the most egregious, with $51.4 billion, up 5.4%, or $2.7 billion, from the first quarter. It has a projected dividend yield of 3.09%. Dominant computer-network firm Cisco Systems (CSCO) held $44.6 billion, and has only a 1.49% projected dividend yield, close to the benchmark Treasury yield. Google (GOOG), the Internet search engine company, held $39 billion in cash, up 2.4% in the second quarter, yet pays no dividend. The same goes for iPad and iPhone maker Apple (AAPL), which ought to be rebranded "iProfit." The company had $28.4 billion on June 30. Those balances have only increased since then, as S&P 500 companies are expected to report higher third-quarter revenue and earnings, which means they're continuing to generate huge cash flows. Hiring is sluggish, as the unemployment has been stuck at or above 9% for all but two months in the past two years. Yet, the share of dividend-paying public companies rose to 40% of 7,000 tracked by S&P Indices in the third quarter, up only slightly from 39.3% in the first and second quarters.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV