S&P 500: 123 Dividend Increases to Just Two Decreases

At the end of last year, I was asked to participate in Bespoke’s Roundtable Q&A. This was one of the questions:

What do you believe will be the dominant investing themes of 2010? What will be the biggest surprises of 2010?
Not a major theme, but I expect a new-found love for dividends. A company like GE could easily raise its dividend by 50%. I doubt many money managers will beat the SDY in 2010.

Dow Jones reports today:

Standard & Poor’s analyst Howard Silverblatt said that, in total, there have been 123 increases this year for S&P 500 companies, and just two decreases, compared with last year’s dismal environment when there were 79 increases and 63 decreases. Total dividend payments have grown by more than $9.2 billion this year, compared with a $37 billion drop last year.
“We are seeing a lot of increases,” Silverblatt said. The moves include “a lot of companies that normally increase and those that increase every couple of years, which is a good sign,” he noted.
But Silverblatt also said there are many companies that are still hesitant, in the face of economic uncertainty, to part with precious cash. European concerns have plagued the stock market in recent weeks and were managing to keep every one of the companies that raised their payouts in the past two days in the red on Thursday, likely making some wary.
And the tax rates on dividends are scheduled to climb sharply starting in 2011, making share buybacks or other alternative cash uses more attractive for some companies.
“They are waiting for actual, in-my-pocket, decent orders of my widgets,” Silverblatt said, “as opposed to just reading how great everything is in the newspaper.”

Posted by on May 20th, 2010 at 3:30 pm


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