Lately, however, some area brokers say investors are paying more attention to the mini-payments as other types of investment yields have dwindled or vanished. The White House is paying attention to dividends, too, hoping to perk up the economy by abolishing income taxes on them. Congress has to give its approval before the tax cut takes effect.
Dividends vary widely. On Wednesday, for example, 29 corporations across the nation declared dividends, most of them quarterly payments. They ranged from the 2 cents a share announced by Wireless Telecom to $1.125 granted by Wisconsin Power & Light.
For the large corporations listed on the Standard & Poor's 500 index, annual dividends currently average 1.7 percent of the stock's purchase price, down from the long-term historic average of 3 percent. But some types of companies, such as utilities and real estate investment trusts, typically pay substantially higher rates, 4 to 7 percent or more, making them alternatives to certain fixed-income investments, such as certificates of deposit or bonds.
Among the companies making dividend announcements this week were two local concerns. Brown & Brown, the Daytona Beach-based insurance retailer, declared a quarterly payment of 5.75 cents a share, while its neighbor, Consolidated-Tomoka Land Co., approved a 5-cent quarterly payment.
International Speedway Corp. is expected to make its dividend announcement in April. Since 1996, it's been paying 6 cents a share once a year.
All three companies describe themselves as growth companies and follow a strategy of reinvesting most of their profits in expansion, rather than passing them to shareholders.
Brown & Brown, however, does increase its dividend rate a bit each year as its profits continue double-digit gains. This year, it will be paying shareholders more than $13 million.
"In 1993 we paid 6.6 cents a share," said Cory T. Walker, chief financial officer. "This year it will be 23 cents for the calendar year. That's a compound growth rate of 13 percent."
"We think paying the shareholders is important, but what's more important is growing the company," Walker said. "That's what our shareholders are telling us, too."
About a third of Brown & Brown's shares are held by company employees, including a large chunk owned by the family of company chairman J. Hyatt Brown. Walker said there's been speculation that if President Bush's tax plan passes Congress, Brown & Brown might hike its dividend rate substantially so the Brown family can reap more tax-free income.
"But the answer is no, we don't think that's the way to go," Walker said. "We want to continue to expand the company."
Rob Diamond, a DeLand investor who's a regional leader of the National Association of Investors Corp., said area stock clubs affiliated with the NAIC tend to keep close tabs on dividends because they're an important part of the NAIC's "total return" goal. If a $100 share rises in value by $10 over a year's time, and also pays out $5 in dividends, it's given its owner a total return of 15 percent.
"The NAIC is always pursuing a goal of 12 to 15 percent total return, so you can double your money every five years," Diamond said. "In the last few years, however, 7 to 10 percent realistically is probably what most of the clubs can achieve."
Most stock clubs, he said, arrange to have their dividends automatically reinvested so their portfolios will grow faster.
Joseph Meyer, an Ormond Beach investment adviser, said he considers dividends an important factor in selecting stocks.
"In this market, I would never own a security unless it paid a dividend," Meyer said. He prefers well-established blue-chip companies offering an annual dividend yield of 4 percent or higher.
However, he said investors need to do thorough research, instead of just picking those companies that happen to have the highest dividend rates.
"Find out how many years they've been paying the dividends and if they're doing well enough to increase the dividend rate," Meyer said. "If you start to see a pattern of falling revenues, it might be time to sell the stock before the company cuts its dividends. Once it does, the share price usually falls precipitously."
Mark McRobert, a broker with A.G. Edwards in Ormond Beach, said many of his clients are retirees who prefer having portfolios with hefty dividends.
However, McRobert cautioned, it's getting harder to find corporations that increase their dividends regularly. An A.G. Edwards study found in 1989, there were more than 1,000 companies with a track record of increasing their dividends annually 90 percent of the time. Three years later, fewer than 500 were meeting that standard.
Some investment advisers say their clients remain focused on stock prices because most dividends are so low. Sy Harding, who produces a national investment newsletter in DeLand, said his clients tend to concentrate on the small growth stocks found on the Nasdaq Stock Exchange because they have potential for quickly jumping in value. He said he doubts that will change even if the dividend tax break becomes law.