Occidental Petroleum stock's 91% rise in the past year is certainly impressive. But you can be sure Warren Buffett, the stock's top owner, is paying attention to another of its wealth-building traits.
Occidental Petroleum is just one of 10 S&P 500 stocks — like Pioneer Natural and Molson Coors Beverage — that at least quadrupled the dividends per share they've paid in the past 12 months, says an Investor's Business Daily analysis of data calculated by S&P Global Market Intelligence.
Occidental Petroleum alone has jacked up its dividend payment by 900% in the past 12 months, an S&P Global Market Intelligence calculation says.
This is a trend worth watching. While dividend-paying stocks outperformed the S&P 500 in the past 12 months, the momentum is still in their favor, says a report from Michael Arone and Matt Bartolini of State Street Global Advisors.
"Even with this significant outperformance, relative valuations for high-dividend stocks are well below their long-term median," the report said.
Mining For Dividend Growth
S&P 500 investors' preference for companies boosting dividends has been apparent for months.
The Vanguard Dividend Appreciation ETF is down just 6.9% in the past 12 months. That's half the S&P 500's 15% drop during that same period. Meanwhile, the Invesco QQQ Trust, chock full of high-growth stocks not known for their dividends, is down more than 25%.
But the real benefits of rising dividends are most apparent from the stocks jacking them up by the most. Eight of the 10 S&P 500 stocks to increase their dividends by the most in the past 12 months are higher in that time.
Take Buffett favorite Occidental Petroleum. His Berkshire Hathaway owns more than 21% of the stock. That makes him the largest shareholder by far. And that's been a powerful winner, not just based on stock gains. Occidental Petroleum boosted its dividends per share by 900% in the past 12 months compared with the same year-ago period, says S&P Global Market Intelligence calculations. That's the biggest jump in dividends in all of the S&P 500.
Occidental's 0.8% dividend yield is far from impressive. The S&P 500 is yielding roughly twice that. But Occidental is serious about raising it, and fast. The dividend increases at Occidental are lapping the roughly 10% increase in the S&P 500's per-share dividend in 2022, says S&P Dow Jones Indices' Howard Silverblatt.
Energy: Where The Dividend Hikes Are Coming From
Energy stocks aren't just winners for their stock-price jumps. They're also turning into gushers of dividend growth, too.
The top half of the S&P 500 stocks boosting their dividends by the most in the past 12 months are all energy plays. Occidental is just the most dramatic example. Pioneer Natural, for another, has jacked up its dividend by more than 500% in the past 12 months.
But it's not just energy firms pumping up their dividends. Another big increase came from Molson Coors, which raised its dividend per share by 335%, says S&P Global Market Intelligence. The brewer paid out a dividend of 38 cents a share in each of the past four quarters. And in the previous year, it only paid a dividend in two quarters of 34 cents a share.
Will Dividend Growth Continue To Hold Investors?
The market is shifting this year a bit. More speculative stocks that don't pay any dividends are starting to perform better.
Cathie Wood's ARK Innovation ETF, which is full of high-growth companies that usually don't pay dividends, is up nearly 14% this year. That makes it the No. 1 diversified ETF this year so far, says Morningstar Direct. And the ETF yields 0%. But remember, the year is young and ARK Innovation was the worst-performing diversified ETF in 2022, losing more than 60% of its value.
Now you can see why Buffett is happy with his rising dividend.
Big Jumps In S&P 500 Dividends
Largest increases in dividend per share in latest 12 months from a year ago
| Company | Ticker | Dividend per share, one-year growth % last 12 months | Stock 1- year change | Sector |
|---|---|---|---|---|
| Occidental Petroleum | 900.0% | 91.4% | Energy | |
| Pioneer Natural Resources | 524.9 | 14.9% | Energy | |
| Diamondback Energy | 412.0 | 17.0% | Energy | |
| Coterra Energy | 402.4 | 15.0% | Energy | |
| APA | 354.5 | 40.8% | Energy | |
| Molson Coors Beverage | 335.3 | 1.1% | Consumer Staples | |
| Tapestry | 320.0 | 10.4% | Consumer Discretionary | |
| Micron Technology | 304.5 | -40.8% | Information Technology | |
| Howmet Aerospace | 300.0 | 18.1% | Industrials | |
| Organon | 300.0 | -3.1% | Health Care |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
