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Standard & Poor's, the world's leading index provider, announced today that it expects the 2009 dividend payment for the S&P 500 to end the year at $22.31, a 21.4% decline from the $28.39 paid in 2008. The decline equates to an aggregate payment of $195.3 billion, compared to the $247.9 billion paid in 2008 leaving investors with $52.6 billion less in dividend payments for 2009.
Year-to-date, there were 147 dividend increases in the S&P 500 (adding $9.5 billion to payments) compared to 241 increases for all of 2008 (which added $19.1 billion). According to S&P Indices senior index analyst, Howard Silverblatt, the difficulty has not been so much the lack of increases, but the high number of decreases. "There were 78 dividend cuts so far this year which decreased payments by $48.0 billion, and that was on top of the 62 cuts in 2008 that reduced payments by $40.6 billion," explains Silverblatt.
At the start of 2009, Financials represented 20.5% of all dividend income in the S&P 500, down from the sector's peak of 30%, and now accounts for just 9% of the payments. However, cuts were posted across all sector lines, with the lone exception of Consumer Staples. Year-to-date, 33 of the 34 dividend actions in Consumer Staples were positive as the sector became the leading and most consistent dividend payer in the Index accounting for 17.4% of the payments.
As for 2010, Standard & Poor's overall view for dividends is positive. "While we do expect additional dividend decreases, Standard & Poor's believes that improving economic conditions will inspire companies to slowly increase their payouts," notes Howard Silverblatt, Senior Index Analyst at S&P Indices. "We expect dividend rate increases to average in the mid to high single digits, with the second half of the year much better than the first half as companies will need time to reassure themselves of their product and financial position."
"Our initial S&P 500 dividend estimate for 2010 is set at $23.67, a 6.1% gain over our 2009 estimate of $22.31. However, given a historical 5.6% dividend growth rate, it would takes years of above par increases to yield back what has been lost," adds Silverblatt. "Our optimistic outlook is set at $24.30, or an 8.9% increase over the 2009 estimate."
"On the pessimistic side of the equation, an increase in unemployment, stimulus spending and government-based programs would reduce our estimate to $17.91," continues Silverblatt. "However, under this scenario, dividends might be the least of our problems."
YEAR POSITIVE NEGATIVE
ISSUES ACTIONS BREADTH* ACTIONS ACTIONS
2007 310 24.83 298 12
2008 303 3.89 241 62
YTD 2009 225 1.88 147 78
Total 838 4.51 686 152
YEAR
ISSUES INCREASES INITIALS DECREASES SUSPENSIONS
2007 287 11 8 4
2008 236 5 40 22
YTD 2009 141 6 68 10
Total 664 22 116 36
$CHANGE-MIL ACTIONS** CHANGE POSITIVE NEGATIVE
2007 $37,175 $25,455 $31,315 -$5,860
2008 $59,712 -$21,506 $19,103 -$40,609
YTD 2009 $57,584 -$38,508 $9,538 -$48,046
Total $154,471 -$34,560 $59,956 -$94,515
$CHANGE-MIL INCREASES INITIALS DECREASES SUSPENSIONS
2007 $29,374 $1,941 -$5,243 -$617
2008 $18,160 $943 -$31,867 -$8,742
YTD 2009 $7,767 $1,771 -$46,845 -$1,201
Total $55,300 $4,655 -$83,954 -$10,561
*Breadth: (increases + initials) /(decreases + suspensions)
**Absolute changes
SECTOR 2009 2009 2009 2009 2009
YTD TOTAL YTD YTD YTD YTD
ACTIONS INCREASES INITIAL DECREASES SUSPENSIONS
Consumer Discretionary 37 20 2 11 4
Consumer Staples 34 32 1 1 0
Energy 13 7 1 4 1
Financials 55 15 0 37 3
Health Care 11 10 0 1 0
Industrials 31 25 0 6 0
Information Technology 11 9 1 0 1
Materials 15 8 0 6 1
Telecommunication
Services 2 1 1 0 0
Utilities 16 14 0 2 0
Total 225 141 6 68 10
INCREASES INITIALS DECREASES SUSPENSIONS
2009: 1/01 - 12/04 141 6 68 10
2008: 1/01 - 12/31 236 5 40 22
2007: 1/01 - 12/31 287 11 8 4
2006: 1/01 - 12/29 299 6 7 3
2005: 1/01 - 12/30 306 10 9 2
2004: 1/01 - 12/31 272 10 3 2
About S&P Indices
S&P Indices, the world's leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P Global 1200, a composite index comprised of seven regional and country headline indices, the S&P Global BMI, an index with approximately 11,000 constituents, and the S&P GSCI, the industry's most closely watched commodities index.
About Standard & Poor's
Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for nearly 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.
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