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Floyd Norris reports “good news for shareholders: the number of negative dividend actions hit a record low of just 64. The previous record low for negative dividend actions came in 1997, when there were 98 such moves. The data go back to 1955."

But the dividend largess is somewhat misleading: “A smaller proportion of corporate profits are being paid in dividends than was the case decades ago, before options became an important part of compensation for most executives.”

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click for larger chart

Nyt_div_paid_off_1

chart courtesy NYT

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While total dividends paid in 2004 by SPX firms reached a record $213.6 billion(even w/o including the one-time $32.6 billion Microsoft dividend), the total payout of dividends — as a percentage of reported profits — was 34 percent in 2004. The historical average, Norris notes, is 54 percent.

In 2004, the S.& P. 500 had a total return for investors of , with Dividends accounting for 17 percent of the SPX’s total return (1.9 % of the total 10.9% return). Dividends have provided 41 percent of the total return on average.

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Source:
Cash Flow in ’04 Found Its Way Into Dividends
By Floyd Norris
NYT, January 4, 2005
http://www.nytimes.com/2005/01/04/business/04place.html

Category: Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Dividend Math”

  1. fester says:

    Dumb question; shouldn’t the preferential treatment of dividends under the Bush tax regime, lead to a higher payout of dividends, as shareholders (theoretically) should pressure profitable corporations to distribute more cash?

  2. Not a dumb question at all!

    It did raise them — just not to the historical levels seen in the past.

    Norris blames the excess of stock options

  3. Jerome Sluggett says:

    On the squak box progran on Tuesday, January 4, 2005 reference was made to an issue to purchase now and highly recommended. We believe the name was Valu Check but are not sure. Can you clarify this for us? Thank you. JVHS

  4. Roasted Peanuts says:

    Errr dumb question here.

    When it comes to dividends.. what happens when a company looses money and reports a negative dividend? How does that work? For example, if a newspaper says a company lost 37 cents a share the shareholders are not paying out 37 cents for every share, right?