Gabriel F. Burczyk
Standard & Poor’s says companies in the S&P 500 index will probably raise their dividend payments by 6.1% in 2010 after posting a 21% decline this year. Year-to-date, there were 147 dividend increases in the S&P 500 (adding $9.5 billion to payments) compared to 241 increases for all of 2008 (which added $19.1 billion). According to S&P senior index analyst Howard Silverblatt, the difficulty has not been so much the lack of increases, but the high number of decreases. He said there were 78 dividend cuts so far this year which decreased payments by $48.0 billion, and that was on top of the 62 cuts in 2008 that reduced payments by $40.6 billion. At the start of 2009, financials represented 20.5% of all dividend income in the S&P 500, down from the sector’s peak of 30%, and now accounts for just 9% of the payments. However, cuts were posted across all sector lines, with the lone exception of Consumer Staples. Year-to-date, 33 of the 34 dividend actions in Consumer Staples were positive as the sector became the leading and most consistent dividend payer in the Index, accounting for 17.4% of the payments. As for 2010, Standard & Poor’s overall view for dividends is positive. S&P says improving economic conditions will inspire companies to slowly increase their payouts.
Source: Wells Fargo Advisors
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