Another Good Quarter for Dividends

The fourth quarter was another strong quarter for dividends. Last quarter, dividend payouts rose by 8.38%. This was the 23rd quarter in a row of dividend growth.

For the year, dividends rose by 10.00%. This was the fifth year in a row of double-digit dividend growth. Since 2010, dividends are up by 90.89% compared with an increase of 62.52% for the S&P 500. That means that despite all the bubble talk, the market’s dividend yield has been increasing. If this has been a bull market, then it’s been one for dividends.

For 2015, the S&P 500 paid out $43.39 in dividends. That’s the index-adjusted number (every one point in the S&P 500 is worth about $8.75 billion). Going by the closing price at the end of the year, the S&P 500 has a dividend yield of 2.12%, based on trailing dividends.

I would never say that the dividend is the best or only valuation measure you should use, but it’s a decent one. What’s interesting is that, except for the worst of the financial crisis, the market has tracked a 2% dividend reasonably closely for over 10 years. This should be another good year for dividends but I’m expecting dividend growth of 5% to 8%.

In the chart below, the S&P 500 is the blue line and it follows the left scale. The dividends are in red and they follow the right scale. Notice how much smoother dividends are. The two lines are scaled at a ratio of 50-to-1. That means whenever the lines cross, the market’s yield is exactly 2%.

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Posted by on January 6th, 2016 at 8:26 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.