Dividends Tidbits

  • $736 billion in dividends - In 2007, according to The Economist (March 7 2009 p.77 'Slash and burn' a great column on dividend reductions)“$736 billion of dividend paid globally by quoted firms in 2007”. Financial companies contributed about a third of these dividends.
  • 1931 - 1935 According to The Economist, dividends per share in America fell by 45% from peak to trough from 1931 to 1935. It that a lot? Is it good news? Well, to look at it positively, dividends were not eliminated during the depression. Remember this point: ”…investors can get a dividend income from equities (even allowing for the likelihood of reduced payouts) that is a multiple of the returns available from cash deposits” The Economist March 2009 Buttonwood
  • Oracle (ORCL - the world's largest business software company) will begin to pay a dividend on May 8 2009 of five cents a share…in total $ 1 billion.
  • 5.8%: In the 19th century and the first half of the 20th century, the average dividend yield on stocks was 5.8%. It was not until 1958 (the year I left high school after Grade 13) that the dividend yield of stocks fell below the interest rate on long-term bonds. (WSJ, Jeremy Siegal, Feb 13 2002) At the market peak, in March of 2000, the dividend yield of the S&P was only 1.2%…way over valued.
  • DIVIDENDS DOUBLED RETURN: If you had bought the Dow in 1928, the year the DJIA was expanded from 20 to 30 stocks, (and counting to the end of 2008) you would have obtained an average annual return of 4.6%. Total return, with dividends included, however, over the same period would have been 8.9% per year. Connolly Thought: 4.6% per year is not much, is it? That's what happens, however, when you buy when stocks are expensive… prices were already rising in 1928 (peak September 7 2009)…poor future returns. Connolly Thought #2. Why would any body buy a stock that did not pay a dividend? In this example, dividends just about doubled returns.
  • According to a spring 2011 study by RBC Capital Markets, stocks which cut their dividend (3.2%) did better than stocks which did not pay a dividend (2.4%) in the last 25 years. Stocks which increased their dividends did even better, of course, at 12.6% a year. Over the same 25 years, the TSE Composite Index returned 7.3%.
dividends_tidbits.txt · Last modified: 2011/04/15 15:04 by tom
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