According to the latest quarterly Janus Henderson Global Dividend Index findings, global dividends are above their pre-pandemic high despite the enormous economic disruption caused by the Covid-19 pandemic. Warren Buffett stock Occidental Petroleum (OXY) and dividend stocks to watch Morgan Stanley (MS) and Wells Fargo (WFC) boosted their payouts in the second quarter.
U.S. Dividend Growth Shows ‘Remarkable Resilience’
“Dividends continue to capture investor attention as uncertainty surrounding the economy’s plight has increased demand for companies with strong free cash flow,” said Matt Peron, director of research at Janus Henderson, in a research note.
He continued, “As we move toward 2023, any slowdown in economic growth will likely have a larger impact on dividend payments outside the U.S. Within the U.S., dividend growth has shown remarkable resilience across market cycles, as companies have demonstrated they are more likely to cut back on share buybacks than trim dividend payments.”
Warren Buffett Stock Boosts Payout
Oil producers contributed over 40% of second-quarter global dividend growth due to surging cash flows from higher oil prices. Warren Buffett-owned energy leader Occidental Petroleum maintained its quarterly dividend at 13 cents per share, which is 1,200% higher than the year-ago period, when it only paid out one cent per share.
Buffett has been on an Occidental Petroleum buying spree, with the billionaire’s Berkshire Hathaway (BRKA) adding nearly 20 million shares to its portfolio since July. On Aug. 19, Berkshire reported that the Federal Energy Regulatory Commission granted Buffett’s company approval to purchase up to 50% of available OXY stock.
Dividend Stocks: Morgan Stanley, Wells Fargo
According to Janus Henderson, Morgan Stanley and Wells Fargo made the largest contributions to growth in U.S. dividends, collectively contributing an extra $1.1 billion. Both banking giants increased payouts to shareholders after the Federal Reserve said the banks were able to keep lending in a hypothetical severe recession.
On July 14, Morgan Stanley reported that earnings fell to $1.39 per share, down 25% from the $1.85 recorded for the same period in 2021. Revenue declined 11% to $13.1 billion over the year. Analysts were expecting EPS to fall to $1.57 on revenues of $13.4 billion.
The company also raised its quarterly dividend to 77.5 cents per share, an increase of 11% from 70 cents. The stock has a 3.5% dividend yield.
One day later, Wells Fargo badly missed Wall Street forecasts for earnings and revenue. The banking giant earned 74 cents per share, a 46% decline year over year. Revenue for the period was $17.03 billion, down from $20.27 billion in 2021. Analysts were expecting earnings of 83 cents per share on $17.5 billion of revenue. Despite the poor quarterly results, the company boosted its dividend to 30 cents a share, an increase of 20%. Its annualized yield is 2.7%.
AT&T Slashes Dividend
Notably, telecom giant AT&T (T) slashed its annual dividend by 46% to $1.11 per share after the company spun off its interest in WarnerMedia as part of its merger with Discovery (DISCA) after the deal closed in the second quarter.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best dividend stocks and the Dow Jones Industrial Average.
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