Bloomberg Anywhere Remote Login Bloomberg Terminal Request a Demo

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

The Rebirth Of Dividends – It’s Going To Be A Long Way Back

Posted by: Howard Silverblatt on April 5, 2010

What a difference a year makes. A year ago the headlines on Q1 2009 dividends were ‘Q1 Worst Quarter for Dividends Since 1955’, today’s Q1 2010 headline is ‘Dividends See a Rebirth in First Quarter’. Increases are up, decreases are way down – and dividend investors need to understand it’s not what you make in the good times, but it’s holding onto it in the bad ones. That’s why the Q1 numbers are so good. Last year in Q1, U.S. domestic common stocks reduced their total indicated dividend payment by $43.8 billions; that is $43.8 billion that investors didn’t get. And similar to a pay cut, it is $43.8 billion that they won’t be getting this year, or the year after this. This year however the tide has turned, with companies adding $6.4 billion back in. Yes, that still leaves dividend investors deeply in the red, but at least there is a turn; at least we are on the path to rebuilding dividend income, as well as some assurance that future payments will be made (better coverage ratios), and the confidence that companies are demonstrating in their financial future, which permits them to commit to cash payments. And that demonstration is key to the underlying economy, and where companies think it is going. Unlike earnings, which can be operating or proforma, or buybacks, where shares can be reissued, dividends are a cash flow item - you send me a check and I WILL cash it, I Will expect another one next quarter, and it is mine – you will not get it back. So you had better be very sure that once you start to pay me, that you can continue. That your forward cash flow is sufficient to cover the check, as well as grow the business. All that said, however, this is just a beginning of a long path, one that I believe will take until 2013 to get back to where we were in 2008.

For the full Q1 2010 dividend report, with files containing aggrigates, sectors and issues, please use the link below.
Download file

Post a comment

 

About

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.

BW Mall - Sponsored Links

Buy a link now!