Dividend Bonanza Is Here: 16 Stocks Boost Payout Up To 9,900%

S&P 500 companies are awash in cash. And one of the only ways to get rid of it is to give it to you — the investor.

Sixteen stocks in the S&P 500, including health care firm Cigna, financial Capital One and technology firm Oracle, aggressively jacked up their dividends by more than 30% in the first quarter — peaking out with a 9,900% increase, says an Investor's Business Daily analysis of data from S&P Dow Jones Indices and MarketSmith. And four of those are brand-new dividend payments.

Investors are loving the dividend bonanza. Shares of the stocks with big jumps in dividends are up an average of 14.5% — just this year. That's on top of the dividend hikes and topping the S&P 500.

Such bold dividend boosts are the "show me the money" phase of the ongoing rally in the S&P 500. Investors enjoyed a powerful 53% jump in the S&P 500 over the past 12 months. And the world's most popular index is up nearly 9% just this year alone.

Dividend boosts are just an added bonus.

S&P 500 Dividends Are Rising Fast

A key part of the S&P 500 rally — dividends — had been missing. Not anymore. The dollars paid out by U.S. stocks in the first quarter of 2021 jumped by the largest amount in nearly a decade, says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. Keep in mind dividends usually account for roughly a third of S&P 500 returns.

"Companies that suspended their dividends have started to pay again, while others who decreased their dividends or left them unchanged in 2020 have resumed increasing payments," Silverblatt said.

S&P 500 companies are boosting and starting dividends at a historic clip. They're on pace to pay out an additional $15.4 billion in the first quarter alone, Silverblatt says. And more than 120 companies boosted their dividends in the first quarter alone. That's up from just 91 that did so in the fourth quarter. Keep in mind now 76.2% of S&P 500 companies, or 385, pay a dividend.

More importantly, though, the dividend hikes are whoppers.

S&P 500 dividend hikes in the first quarter averaged 11.1%, up from 9.8% in the fourth quarter of 2020 and 9% in the first quarter of 2019, Silverblatt says. Dividends dropped in the first quarter of 2020. Companies cut back on and suspended dividends hoping to conserve cash going into the pandemic. Back then, 413 S&P 500 companies paid a dividend.

Some are still waiting before paying again. But many are making big moves now.

S&P 500 Dividends: Something From Nothing

Perhaps the most bold pronouncements of faith in business are from S&P 500 companies that just started paying dividends again the first quarter — from nothing.

Take materials firm and Big Cap 20 member Freeport-McMoRan. The company in March said it would start paying a quarterly dividend of 7.5 cents a share. That's a dividend of 30 cents annually, yielding 0.8%. That's not a massive yield, but it's better than the zilch it paid previously. Keep in mind, too, shares of Freeport-McMoRan are up 387% in the past 12 months, and 34.6% just this year.

And it's not alone. HCA Healthcare, retailer Ross Stores and Universal Health Services all announced paying a dividend, up from nothing, just this year.

Massive S&P 500 Dividend Hikes

S&P 500 stock investors are expecting a "roaring 20s" like bounce in economic activity. And some S&P 500 companies aren't wasting any time with their dividend hikes. Investors are loving the dividend hikes.

Cigna said in January it will shower investors with an annual dividend of $4 a share, says S&P Dow Jones. That's up 9,900% from just four cents a share previously. The company now yields more than 1.6%. Shares are up nearly 38% in a year's time, including 14.9% this year.

Big S&P 500 dividend hikes keep coming. It's a reminder to look for dividends you can count on.

Darden Restaurants, which runs Olive Garden, announced a 54% hike in its annualized dividend to $2.07 a share in March. That marked the largest percentage increase in an S&P 500 company's dividend announced in March. Again, investors are lapping up the dividend hikes. Shares of Darden are up 176% in a year and 21% this year.

And it seems S&P 500 companies are only getting started jacking up their dividends. Dividends are likely to jump to a record payout this year, Silverblatt says.

"The accelerating vaccine schedule and reopenings, (and) projections (calling) for record profits in the second half of this year ... could fuel the way for more companies to feel secure about starting and increasing dividends," Silverblatt said.

Biggest S&P 500 Dividend Boosts In The First Quarter

Sources: IBD, S&P Global Market Intelligence, S&P Dow Jones Indices