S&P estimates 6.1% dividend increase for the S&P 500 Companies in 2010
2009 Dividend Payment Expected to Post 21.4% Decline
Standard & Poor’s, the world’s leading index provider, announced today that it expects the 2009 dividend payment for the S&P 500 to end the year at $22.31, a 21.4% decline from the $28.39 paid in 2008. The decline equates to an aggregate payment of $195.3 billion, compared to the $247.9 billion paid in 2008 leaving investors with $52.6 billion less in dividend payments for 2009.
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 Indices senior index analyst, Howard Silverblatt, the difficulty has not been so much the lack of increases, but the high number of decreases. “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,” explains Silverblatt.
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. “While we do expect additional dividend decreases, Standard & Poor’s believes that improving economic conditions will inspire companies to slowly increase their payouts,” notes Howard Silverblatt, Senior Index Analyst at S&P Indices. “We expect dividend rate increases to average in the mid to high single digits, with the second half of the year much better than the first half as companies will need time to reassure themselves of their product and financial position.”
“Our initial S&P 500 dividend estimate for 2010 is set at $23.67, a 6.1% gain over our 2009 estimate of $22.31. However, given a historical 5.6% dividend growth rate, it would takes years of above par increases to yield back what has been lost,” adds Silverblatt. “Our optimistic outlook is set at $24.30, or an 8.9% increase over the 2009 estimate.”
“On the pessimistic side of the equation, an increase in unemployment, stimulus spending and government-based programs would reduce our estimate to $17.91,” continues Silverblatt. “However, under this scenario, dividends might be the least of our problems.”
Additional dividend research from Standard & Poor’s can be found by visiting: www.marketattributes.standardandpoors.com and clicking on “Dividends”.
Source: Standard & Poor’s