S&P Sees Dividends Drying Up

Includes: DVY, PFM, SDY, VIG
by: Bespoke Investment Group

New signs of stress in the US economy seem to be popping up every day, and today's news comes from S&P.  According to Dow Jones, S&P sees fourth quarter dividends among S&P 500 companies declining by 10% year over year.  This would make it the fourth worst quarterly decline since 1944.

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According to S&P's study, most of the decline is a result of dividend cuts in the Financial sector where there have already been 35 cuts this year totalling $35 billion.  This compares to only 12 cuts totaling $3.1 billion over the last five years. 

But not all the news is bad regarding dividend investing.  The same S&P report also estimated that over half of all dividend paying companies in the S&P 500 plan on raising their payouts in 2009, and illustrates the importance of focusing on more than just yield when looking at companies that pay dividends. 

Other factors investors should consider are the company's record of paying dividends (Do they have a consistent record of increasing their dividend?) as well as their ability to pay it in the future (What are the company's debt levels and forecasts for future earnings?).