Saturday, January 17, 2009

Financial Stocks Continue To Bear Brunt Of Dividend Cuts

For the week ending January 16, 2009, additional financial firms announced cuts in their company dividends. The popular going forward dividend rate seems to be a penny a quarter.

Below is a table detailing year to date dividend rate changes in January. The three cuts are all financial stocks: Bank of America (BAC), Marshall & Ilsley (MI) and XL Capital (XL).

(click to enlarge)

Some detail on the cuts and impact on the S&P 500 Index:
  • Financial sector now accounts for 15.8% of all dividends, down from 34%, makes up 11.2% of the market value (22.3% at year-end 2006).
  • BAC's dividend reduced from $1.28 to $0.04 (was reduced last Oct from $2.56 to $1.28 after over 25 years of increases, issues was a Dividend Aristocrat). This reduces the S&P 500 payout (and yield) by 3.4%
  • BAC was the fifth largest dividend payer ($6.4B), yielding 15.4%, now it yields 0.5% ($0.2B) ranking 202 out of the 369 that pay.
  • 2009 S&P 500 dividend expected to be the worst in at least 50 years

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