Ask Matt: Are dividends still golden?

Investors have been on a dividend gravy train for years. That train is slowing down, but dividends are still a golden source of returns for long-term investors.

It was another great year for dividends. Companies in the Standard & Poor's 500 paid out 10% more in regular cash dividends in 2015 than they did in 2014, says Howard Silverblatt of S&P Dow Jones Indices. That marks the fifth consecutive year of double-digit growth in dividend payments. The dividend payments made to investors in the fourth quarter hit a record for the seventh quarter in a row.

But investors are seeing signs the rapid growth in dividends can only slow down as corporate profit growth cools. The dividend increase paid by the average company for 2015 was 13% in 2015, which is down from 17.5% in 2014 and 20.4% in 2013, Silverblatt says. Investors shouldn't expect the double-digit dividend increases to continue, he says, with the streak likely to be broken this year.

Still, savvy investors know dividends are a lucrative source of return, especially in a flat market. Last year was a classic example. Investors holding the stocks in the S&P 500 earned a total return of 1.4%. But that positive return was entirely due to the 2.1% dividend yield of the market. The market actually fell 0.7%.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.