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Why bother? 11 big stocks pay tiny dividends

Companies know dividends are like Scooby snacks for investors. Give an investor a dividend and they’ll put up with almost anything. But apparently they need more than crumbs.

There are 11 big companies in the Standard & Poor’s, including Pioneer Natural Resources, Precision Castparts and PVH, that are paying minuscule dividend yields of 0.25% or less, according to a USA TODAY analysis from S&P Capital IQ. On average, these companies are paying a yield of 0.135%. That’s well below the roughly 1.9% dividend yield paid by the S&P 500.

Let’s put it another way. If you invested $10,000 in these mini-dividend companies, you’d expect to receive a laughable annual dividend of $13.50. Don’t spend it all in one place. The same $10,000 invested in the S&P 500 would yield roughly $190.

Investors don’t appear to be amused. Shares of the 11 stocks paying the tiniest dividends are up 3.5% this year on average. That lags the 8.1% gain by the S&P 500 during the same time. That means investors aren’t just losing on dividends, but on price appreciation, too.

Here’s a chart that shows what investors think of the stocks with these micro dividends. A custom equal-weighted index of the 10 stocks with the tiny dividends has been lagging both this year and over the past 12 months:

The separation is the most dramatic over the past three months:

The tiniest dividend is paid by oil and gas exploration company Pioneer Natural Resources. The company is paying a bi-annual dividend of 4 cents a share or 8 cents a year. Applied to the stock price of $203.62 – and that amounts to a yield of 0.04%. Better than nothing, right?

And then there’s metal parts maker Precision Castparts. The company pays a quarterly dividend of 3 cents a share, or 12 cents a year. That’s a yield of 0.04% as well. Perhaps a more recognizable company with a micro-dividend is PVH, the apparel company that makes everything from Speedo swimsuits to Calvin Klein shirts. The company pays $0.0375 a share in a quarterly dividend or 15 cents a year. What’s the yield? Ready for this? 0.12%.

Certainly, some of the microscopic dividends aren’t completely the companies’ doing. Banks, including Citigroup (C) were required to slash their dividends during the financial crisis. Citigroup has been slow to increase the dividend, and instead, have focused on using excess cash to buy back stock. It’s still a bit unusual of a situation to have low-yielding banks, since bank stocks were largely coveted in the 1980s in large part due to their dividends.

And here’s a twist for the ever contrarian investor. Perhaps some of these companies might be the ones to make large increases to their dividends? It’s not like they’re paying $0, so they don’t appear to be against dividends. And if there’s something investors like better than a large dividend, it’s one that’s growing.

Below are the 11 companies in the S&P 500 that are paying the lowest dividend yields:

CompanySymbolDividend yield %YTD % Stock Ch.
Pioneer NaturalPXD0.04%10.6%
CignaCI0.042%6.7%
Precision CastpartsPCP0.05%-10.3%
CitigroupC0.077%0.2%
PVHPVH0.119%-7.5%
AllerganAGN0.12%51.5%
EQTEQT0.126%6.8%
TextronTXT0.212%2.0%
Range ResourcesRRC0.214%-12.7%
Cabot Oil & GasCOG0.236%-13.7%
QEP ResourcesQEP0.238%5%

Sources: S&P Capital IQ, USA TODAY