The upside of an economic downturn

THE oddity of blue-chip stocks is that while sentiment towards them has rarely been poorer, their balance sheets have rarely been healthier.

Given most companies are increasing their earnings - albeit at subdued rates in the industrial sector - that makes for healthy dividend payouts.
And given diminished share prices, that also makes for highly attractive yields that put bank accounts to shame.
According to Patersons Securities quantitative analyst Kien Trinh, average second-half dividend growth came in at 5 per cent for the industrials (including the banks), 2 per cent better than expected. "This was on par with earnings-per-share growth," Trinh says of the figure, based on 170 companies.
"For resources companies, dividends grew 10 per cent on average over the half, while EPS growth came in at 32 per cent," Trinh says.