Dividends Soar 19.5% in Q3

According to the latest numbers from Standard & Poor’s, dividends are hot. For the third quarter, the S&P 500 paid out an index-adjusted 7.771 in dividends which is an all-time record. That’s an increase of 19.5% over the third quarter of 2011. For the first and second quarters, dividends rose by 15.1% and 14.9% respectively.

For the trailing four quarters, the S&P 500 paid out an index adjusted 29.59 in dividends which is also an all-time record. It just narrowly takes out the previous four-quarter peaked which came in the third quarter of 2008. At the latest prices, that comes to a yield of 2% (note that this is going by trailing payouts, not project). For the year, I think it’s very possible for the S&P 500 to pay out 30.60 in dividends.

Here’s the S&P 500 (in blue, left scale) along with dividends (in black, right scale). The two lines are scaled at a ratio of 50-to-1.

I like to follow dividends because they tend to be stable. During the market plunge of 2008-09, however, dividends took a beating especially in the financial sector. The government wasn’t about to allow bailed out banks to pay funds to their shareholders. As a result, many banks slashed their dividends to the bone.

Only recently have dividends in the financial sector started to some signs of life. Two weeks ago, the Financial Sector ETF ($XLF) paid out a quarterly dividend of 6.6 cents per share. That’s a 32% increase over one year ago, but it wasn’t that long ago that the XLF was paying out more than 20 cents per share.

Posted by on October 8th, 2012 at 11:42 am


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