So energy companies aren't the only ones with upside potential for payouts. In fact, evidence compiled by Thornburg finds several industries offer far greater prospects for dividend growth including technology, health care, financials and consumer staples.
So what could derail a renewed focus on dividends and equities as income investments? As Bernstein mentioned, dividends have no constituency. If the Democrats were to regain control of the White House and/or Congress and seek to shrink the unprecedented budget deficits, raising taxes back to their former levels might make an inviting target.
But there are reasons why they might not. Even after the reduction to a 15% tax rate, the United States is the only major industrialized nation to impose double taxation on dividends, creating inequities for American shareholders. While it's difficult to imagine bureaucrats at the World Trade Organization or the European Union complaining about the inequities imposed on American investors, more economists are examining it.
Even before lower dividends became law, some corporate managements indicated that with growth prospects less buoyant than in the '80s and '90s, higher payouts were a real possibility. Of equal importance is an embryonic constituency that could materialize for dividends-baby boomers approaching and entering retirement. More Americans than ever are invested in equities, and if the dividend component of total return rises while the capital gains component declines, even these oblivious investors might awaken to the attraction of equities as income vehicles. Unlike bonds with fixed coupons, dividends can provide a measure of safety from the corrosive effects of inflation.