Cash Management

More Companies Delivering Dividends

A cautious rise in traditional dividends is supplemented by a surge in extras.
Stephen TaubJanuary 4, 2007

Standard & Poor’s reported that 1,969 companies increased their dividend during 2006, an uptick of 1 percent from the 1,949 that did so a year earlier.

Last year’s figure would have been higher if December’s total, 154 increases, had matched the 166 recorded in December 2005.

The overall number of dividend payments in 2006 represented a 7.1 percent increase compared with 2005 and 16.1 percent compared with 2004, noted S&P.

“The improvement in dividends from the sharp decline of the 2000-2002 market continues, with companies cautiously increasing their payments, said S&P analyst Howard Silverblatt, in a statement. “Dividend reductions continue to be low, reflecting the more assured approach to payments.”

S&P also reported that dividend extras — such as one-time dividend payments and special dividends — increased by 14.3 percent to 622 last year, compared with 544 in 2005. Indeed, the December surge in dividend extras was the largest since 1978, Silverblatt pointed out.

“While dividends have increased slowly, extras have grown quicker since they are generally regarded as a single payment, with the company not obligated to make any additional payments,” he added.

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