Tuesday, March 20, 2007

Dividend Rate on S&P 500 for 2007 Increased by S&P

Today, Standard & Poor's announced they were increasing the indicated dividend rate on the S&P 500 Index to $26.55 from $25.10. S&P estimates companies in the 500 will pay out $27.85 per share in 2007 versus $24.88 in 2006 and $22.22 in 2005. This represents a 11.9% increase in the dividend payment. Additionally, aggregate payments would total $252 billion in 2007 versus $222 billion in 2006.

As I noted in my post the other day regarding dividends and buybacks (click here) there is concern about the magnitude of buybacks. S&P notes:

“We are concerned that the large expenditures on buybacks may be inhibiting dividend growth,” continues Silverblatt. “While Standard & Poor’s has yet to see a significant decline in the number of dividend increases, the lack of increases, as well as the absence of new initiations, speaks to the current climate of buyback preference.”

Silverblatt points out that the tendency for index issues to pay and increase cash dividends is much greater than that of the general market as 77% of the S&P 500 constituents pay cash dividends versus just 40% for the non-S&P 500 companies. For 2007, Silverblatt estimates that over 60% of the S&P 500 will increase their dividend payout compared to just 30% for non-S&P 500 companies.

No comments :