Fourth Quarter 2012 Dividend Rate Increases $8.4 Billion: S&P Dow Jones Indices

NEW YORK, Jan. 7, 2013 /PRNewswire/ -- S&P Dow Jones Indices announced today that dividend net increases (increases less decreases) were $8.4 billion during the fourth quarter of 2012.  The indicated dividend rate excludes special and extra one-time dividend payments, and was therefore not impacted by the massive late-year rush to avoid new, higher taxes. During Q4 2012, 1,262 dividend increases were reported, a 94.5% gain over the 649 dividend increases reported during Q4 2011. Of the approximately 10,000 U.S. traded issues, 154 companies decreased dividends in Q4 2012 compared to 27 companies in the Q4 2011. For 2012, there were 2,883 positive dividend events compared to 1,953 in 2011, and 275 negative events in 2012, compared to 101 in 2011.

"Dividends had a great 2012 with actual cash payments increasing 18% and the forward indicated dividend rate reaching a new all-time high," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "Payout rates, which historically average 52%, remain near their lows at 36%. At this point, even with many January payments paid in December, we should see 2013 as setting another record for regular cash dividends."

The percentage of non-S&P 500 domestic common issues (ASE, NYSE, NASD) paying a dividend increased to 44.9% in Q4 from 43.4% in Q3. Silverblatt also determined that yields for paying issues increased throughout 2012, however ended flat at 2.80%.

"The 2.80% overall equity yield remains relatively high, even at the higher dividend tax rate, when compared to competing income producers such as corporate bonds,  treasuries, or bank CDs," adds Silverblatt. "Given the range of yields within equities, from lower yielding growth issues to higher yielding income producers, this leaves investors with one of the few remaining areas of choice with measurable degrees of stability."

Additionally, Silverblatt reports that individual investors have saved $358 billion on qualified dividend tax cuts from 2003 through the 2012 expiration date. "At this point the economy remains our highest concern, with the higher dividend tax rate having some negative impact, but relatively minor," says Silverblatt.  

Looking ahead, Silverblatt is seeing many positive signs for dividends, including earnings coverage and increased cash balances. "Investors are seeking income and companies are increasing their aggregate payout," adds Silverblatt. "However, while companies are paying out record dividends, these amounts are still significantly below historical payout rates. It's not a matter of companies being cheap. It's a matter of them being nervous about the economy and their resources, similar to most of us."

To download the S&P Indices Dividend Report, please visit the following web address: www.spindices.com/indices/equity/sp-500 and click on "S&P 500 Monthly Dividend Report" from the "Additional Info" drop down box. For more information about S&P Dow Jones Indices, please visit www.spindices.com.

The above estimates assume levels of direct S&P 500 ownership and dividend qualifications based on historical data. The assumptions for non-S&P 500 are based on broader indicators and are not as well documented.

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SOURCE S&P Dow Jones Indices LLC