Standard & Poor’s, the index provider, announced that of the approximately 7,000 publicly owned companies that report dividend information to Standard & Poor’s, 191 companies increased their dividend payment during the third quarter — marking the worst third quarter ever for dividend increases.
The 191 companies that increased their dividend payment during the third quarter represents a 44.8% drop from the 346 issues that increased their dividend during the third quarter of 2008. Additionally, dividend decreases were posted by 113 issues during the third of 2009, the highest third quarter figure since the third quarter of 1982, when 155 issues decreased their payment.
“The third quarter number suggests, when analyzed with additional information, that dividends may have finally hit bottom,” says Howard Silverblatt, senior index analyst at Standard & Poor’s Index Services. “However, even if the economy responds to the various economic stimulus programs, it may still take several quarters of proven results for companies to be comfortable with increasing, or initiating, their dividend payments. When dividends finally start to increase, it will most likely be at a more subdued level then the average 17% we saw in 2007.”
According to Silverblatt, dividend increases have out numbered dividend decreases every year for as far back as Standard & Poor’s dividend data dates – 1955. Since 1955, the average has been fifteen increases for every decrease. Standard & Poor’s latest data shows that it is now close to a one-to-one relationship.
Silverblatt concludes by noting that many issues are still increasing their dividend rate, but finding those issues is getting harder. “Standard & Poor’s Index Services believes that over the next few months, as companies review and implement their 2010 budget and expenses, the fate of many dividends will be determined.”
D.C.