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Dividend Math

Posted By Barry Ritholtz On January 4, 2005 @ 10:26 am In Finance | Comments Disabled



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.”


click for larger chart

Nyt_div_paid_off_1 [1]

chart courtesy NYT [2]


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.


Cash Flow in ’04 Found Its Way Into Dividends [3]
By Floyd Norris
NYT, January 4, 2005

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/01/dividend-math/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/nyt_div_paid_off_1.gif

[2] NYT: http://www.nytimes.com/imagepages/2005/01/03/business/20050104_PLACE_CHART.html

[3] Cash Flow in ’04 Found Its Way Into Dividends: http://www.nytimes.com/2005/01/04/business/04place.html?ex=1262494800&en=0af5d97cc089efc8&ei=5090&partner=rssuserland

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