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Corporate Dividend Growth Deteriorates as Decreases Surge

Posted by: Howard Silverblatt on April 4, 2008

Dividend growth deteriorated as decreases surged during the first quarter, but large-cap issues with strong dividend history continued unabated.
(press release)

Based on U.S. domestic, common, listed (NY, ASE, NGM, NNM, or NSC), with dividend rates during the first quarter:
Increases down 19.2%; Decreases up 337% (83 from 19)
Non-financials increased slightly more (19.9%) than Financials (18.4%), but decreased more often (6.2% vs. 3.4%)

By the Dollars:
Financial cuts account for over 75% of the overall dollar reduction, with Citigroup accounting for over half the overall decrease
For the quarter, dividend rates were flat, with non-financials up 2.1% and financials down 5.0%; ex/Citigroup financials are up 0.1%

By Market Value: Over and Under $10 billion
Greater tendency for high-caps to increase: 27.2% vs. 18.7%, and lower tendency to decrease: 2.1% vs. 5.7%

For the S&P 500 I maintain my 9.3% dividend growth estimate for 2008.
The tendency for index issues to pay and increase their cash dividends is much greater than that of the general market, with 76.8% of the S&P 500 constituents paying cash dividends versus 39.6% for the non-S&P 500 companies. For 2007, over 60% of the S&P 500 increased their dividend payout compared to less than 28% for the non-S&P 500 companies.

While I continue to have concern over the deterioration within the Financial sector, as well as the economy at large, I believe the vast majority of S&P 500 companies will continue their long history of dividend payments and increases in 2008. I am therefore maintaining my 9.3% estimated growth rate in actual cash dividends paid in 2008 over that of 2007.

For additional dividend data, as well down loadable files of S&P 1500 issues that have increased their dividend payments at least 10 years in a row, S&P 500 issues that have increase at least 25 years in a row, as well as dividend payers vs. non-payers performance numbers, please click here.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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