Standard & Poor’s announces the worst quarter for dividends since 1956 year. Despite significant dividend decreases S&P mentions that issues are still increasing their dividend rate.
288 of the approximately 7,000 publicly owned companies that report dividend information to Standard & Poor’s Dividend Record decreased their dividend during the fourth quarter of 2008, representing a 444% increase from the 52 issues that decreased their dividend during the fourth quarter of 2007. Reported dividend increases fell 40.0% to 475 from the 792 reported during the fourth quarter of 2007.
“It was the worst quarter for dividends since we started keeping dividend records in 1956,” says Howard Silverblatt, senior index analyst, Standard & Poor’s. “Due to the timing of the cuts many issues actually paid in the fourth quarter, so the full impact of the cuts won’t be felt until the first quarter of 2009. Dividend increases continued to fall, and given the heightened uncertainty and change in spending habits, companies will be wary of any increases.”
“Yields for paying issues have doubled over the past two years to 7.28% in 2008,” continues Silverblatt. “As a result, investors need to be careful of overly generous yields, which are due mostly to depressed stocks. It is a different risk-reward trade off than dividend investors are typically used to.”
L.D.