Posted by: Howard Silverblatt on July 6, 2011
It’s been a good first half for U.S. dividend investors. U.S. listed common stocks increased their dividend payment $11.2 Billion in the second quarter of 2011, compared to the $19.0 Billion increase in the first quarter. The decrease is more a result of the great first quarter, than a disappointing second one. For the first half of 2011, the dividend increase of $30.2 Billion already surpasses all of 2010, which had a $26.5 Billion increase. The net result is that if you look at dividends as your pay check, you received a 4.1% increase in the second quarter, and an 11.1% first half of 2011 increase (4.1% for Q2 and 6.7% Q1). S&P 500 investors also received a 4.1% increase, but did better in the first quarter (7.4%) to end up with an 11.9% first half year increase. Dividend decreases continued to decline, with only 21 issues doing so in the second quarter compared to 30 in the first quarter (vs. 34 in Q2,’10 vs. 250 in Q2,’09). Increases declined to 444 in Q2,’11 from a very active and positive 510 in the first quarter (vs. 335 in Q2,’10 vs. 233 in Q2,’09). The dividend increases, combined with a minor second quarter market price decline pushed up the average dividend yield for paying U.S. Domestic common issues to 2.51% on 6/30/2011, compared to 2.39% on the 3/31/2011. Overall, it was a very good Q2 with few decreases, but not the level of the great Q1.
Going forward I expect to see more dividend increases across all sectors, with few decreases, along the line of the second quarter. Investors appear to be coming back to more of a total return mentality, and historically dividends make the difference. I do have some concern if investors start to reward buybacks (SCR - share count reduction), since companies may respond as they did in 2006/7 with more buybacks, impacting cash dividends. I also believe, if the economy continues to improve (slowly), and home and commercial real estate portfolios don’t deteriorate, that we could see a second round of Financial dividend increases late in the year, with the increased payment being made in the first quarter of 2012.
For more details see the attached file dividends_20110706.rtf