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Posted by: Howard Silverblatt on October 21, 2008

I expect the Q4,’08 S&P 500 dividend payment to decline 10% over Q4,’07, making it the worst decline since 1958. Outside of the index (NYSE, ASE, NASD common) things are worse, as companies take the necessary steps to improve liquidity. There are however many issues increasing their rates, and in this environment that takes a significant level of confidence in future earnings and cash flow.

Below are the highlights, with a link to the press release, as well as a link to the S&P Dividend area, which contains several downloadable dividend lists.

Reducing 2008 payment from $28.85 to $28.05, 2007 was $27.73
The 1.2% expected 2008 increase is the lowest growth rate since 2001 when payments were down 3.3%
Full impact of the annual dividend reductions won’t be felt until 2009
Q4,’08 over Q4,’07 payment expected to decline 10% - worst quarterly change since 1958
14 Financial dividend decreases since September reduction dividend payments $14.8B; net impact, including increases, is a -4.8% cut in dividend income
For 2008, due partially to when the decreases were implemented, over half the S&P 500 are expected to pay out more this year than last
Concern over tax qualification of 2008 dividends for issues not paying Federal taxes: qualified pays 15% (Federal max), non-qualified 35%

Due to the recent events, including government actions that might limit dividend payments, we are reducing the indicated dividend rate from $28.85 to $27.35; this is not our 2009 estimate (later this quarter)
Given the current economic climate, 2009 dividends increases are expected to slow with the main issue being concern over dividend cuts

Outside the S&P 500 (NY, ASE, NASD common) the situation continues to deteriorate:
September was the worst month for dividends since we started keeping dividend records in 1956
October-to-date has 36 decreases compares to 7 for all of October 2007 (2006@8, 2005@10, 2004@5)
October-to-date has 64 increases compares to 203 for all of October 2007 (2006@192, 2005@195, 2004@184)
Year-to-date Financials accounts for 60% of the decreases and over 90% of the dollar damage
Year-to-date Energy accounts for 13.5% of the increases and 22.3% of the dollar gains

For the press release, please click here

For additional information, 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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