Despite the popularity of dividend investing, the pace of dividend increases has slowed steadily in recent years, making it more difficult to find companies that are likely to increase their payouts.
According to Joseph Lisanti former editor-in-chief of Standard & Poor’s weekly investment advisory newsletter, the S&P 500’s current ratio has declined to 44.4%, down from its average of 51.4% over the past 80 years.
Energy Is a Bright Spot
Lisanti points to a few areas where a turnaround might occur and dividends could increase. The most promising, perhaps, is energy. There, the rebound in oil and gas prices could lead to an increase in dividends among energy producers, which are traditional dividend payers. Energy contributed 12% of the S&P’s dividends in 2014, but only about 9% last year. If oil prices continue to increase, it’s likely that energy producers will increase their payouts.