S&P 500 Dividends May Decrease 13.3%, Most Since 1942 (Update1)
bloomberg.com
Feb. 6 (Bloomberg) -- Dividends for Standard & Poor’s 500 Index companies will probably plunge 13.3 percent this year, the steepest annual decline since 1942, S&P forecast.
Companies in the 500-stock index are on pace to make $214.7 billion in payouts in 2009, compared with $247.9 billion, S&P projected in a statement today.
“Given the current economic climate and growing concern over dividend cuts, dividend increases for the S&P 500 companies are expected to slow in 2009,” Howard Silverblatt, a New York-based index analyst at S&P, said in the statement. “Unless companies believe that their financial future will improve, their need to conserve cash will outweigh their desire to pay dividends.”
The worst year for stocks since the Great Depression pushed dividends as a percentage of the S&P 500’s price above 4 percent in November, the highest yield since Bloomberg data begin in 1993.
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The dividend payout and yields as a % of the S%P 500 must come down. Either dividends get slashed or equity prices rise.
Companies may find that they are forced to conserve their cash and will cut their dividend payout. When this occurs, we may find that we are near the bottom and it should be "ripe" for value buys.
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