This story is brought to us by Barry Ritholtz at Seeking Alpha. It could be very disturbing for us dividend investors. But, as always, we must form our own opinions. Here are some tidbits from the article:
Consider the following data points regarding dividends:
â€¢ Companies in the S&P 500 are projected to spend ~$220 billion on dividends in 2006;
â€¢ That figure represents a 9% increase over 2005;
â€¢ Stock repurchases are up 12%, to $410 billion in 2006.
â€¢ For the first 3 Qs of 2006, dividend enrichments edged up 2.8% (compared with ’05’s initial 3Qs);
â€¢ Special (non-recurring) dividends advanced 19% in the 1st 9 months of the year, while reinstatements advanced 25%;
â€¢ S&P counted 14 dividend cuts last quarter — 75% more than a year earlier.Omissions dropped 21%, while 29 companies decreased their payouts this year; The total of “passed payouts” was flat.
The action in the market at present is a function of liquidity and momentum; It is not fundamentally driven.
The article goes an to explain some details that are very interesting about the S&P 500 companies and their dividends.