The Roman colliseum, the Tower of Pisa and the Eiffel Tower. History has been leaving its stamp across Europe through various structures that tourists from all over the world want to make a part of their lives when traveling to the Old Continent.
Something similar happened with the dividend, a portion of corporate earnings that companies pay to shareholders who own common or preferred stock. Historically, dividends have always been higher in Europea than in the United States. It could be that the New York skyline is not as steeped in tradition as older European cities. But the US is catching on to European fashion. Companies traded at Wall Street are now paying higher dividends on average than companies in Europe if you factor in share buyback options.
In addition to traditional dividend strategies, there are other forms of paying shareholders. For example, sometimes a company buys its own shares and then re-distributes them to shareholders, which increases the earnings per share for each investor. United States companies have pioneered this strategy.
Companies on the S&P 500 offered 2.3% yields through traditional dividends last year, and this rate of return is expected for 2013 as well. But factoring in share buyback programs pushes this number up to 5.3%, which is higher than the 4.2% yield offered by Europe's Stoxx 600 index. Of the more than 100 US companies paying dividends, 43 offered more than 5% yields to shareholders last year.
