Capital Markets

Dividend Payouts Fatter Than Ever

This year, 119 companies have already raised their dividends, and the average payout has increased 16 percent.
Stephen TaubMay 20, 2004

Companies that make up the Standard & Poor’s 500 are expected to shell out a record $183 billion in dividends in 2004, up from $161 billion in 2003. Staples Inc., Cendant Corp., and Costco Wholesale Corp. are among the companies that began paying dividends this year, and many companies that already offered dividends are increasing the payout.

Why all the interest in dividends?

One reason is that last year the dividend tax rate was cut to 15 percent. In addition, investors burned by the popping of the late 1990s bubble are once again interested in current income rather than stock growth.

As a result, the average annual yield has surged to 1.7 percent from its all-time low of 1.1 percent in March 2000 — which just happens to be when the stock markets hit their all-time highs.

This year, 119 companies have already raised their dividends, compared with 92 at the same time last year, according to The Wall Street Journal. Through the first four months, the average payout has increased by 16 percent.

Altogether, 374 of the companies in the S&P 500 are making some sort of payout — the highest number since 1999 — compared with 370 at the end of 2003 and 351 at the end of 2002.

Just three companies have reduced their dividends, and only Winn Dixie Stores suspended its payout, the paper noted.

The companies with the largest total payouts are Citigroup, $8.27 billion; General Electric, $8.17 billion, and Exxon Mobil, $7.06 billion.

Investors are certainly not complaining. Stocks that pay dividends are down an average 0.55 percent this year; non-dividend-paying issues are off nearly 5 percent.