Dividends Rose Nearly 15% Last Quarter

Dividends had another solid quarter for Q1. According to numbers from Standard & Poor’s, the S&P 500 paid out $10.55 in dividends last quarter. That’s the index-adjusted number (each one point in the index is about $8.85 billion).

That’s an increase of 14.84% over the first quarter of 2014. The S&P 500 only rose 0.43% for the first quarter, or 1.76% annualized. That means that the dividend yield is increasing for stocks. The dividend yield is, of course, only one measure of value, but for now, it doesn’t signal that stocks are in bubble territory.

Dividends for the first quarter were 93% higher than they were for the first quarter of 2010. That’s an impressive growth rate for five years. The S&P 500 will probably pay out about $44 in dividends this year. What’s interesting is how closely the index has tracked a 2% dividend yield over the past several years.

Here’s a chart of the S&P 500 (left scale, black line) along with the dividends (right scale, blue line). I scaled the two lines at a ratio of 50-to-1 so whenever the lines cross, the dividend yield is exactly 2%.

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Beginning in about 2003, the blue and black lines track each other fairly well. The exception is during the financial crisis, but they soon got back together.

Again, dividend analysis is only one tool in our arsenal. But one thing I like about it is how steady the trends are, especially compared with the volatility of prices.

Posted by on April 6th, 2015 at 12:40 pm


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