The chart shown below (click on the chart to see a larger image) illustrates dividend information for the S&P 500 Index from 1977-2012. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $31.25 in 2012. That works out to a total increase of about 569.08% and an annualized increase of 5.581% in the dividend yield. This is a particularly impressive annual increase considering that this time period includes several bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09. The last two bear markets were particularly painful as the S&P 500 Index lost more than 50% of its value during both.
in the chart below, the annual % increase in dividends increased very
rapidly during the late 70s-early 80s as a result of inflationary pressures (during the 1970s) and strong economic growth (during the 1980s). The annual % increase in dividends was also strong between 2003 and 2007, fueled
both by strong corporate profits and the
dividend tax cut that Congress passed in 2003. Dividend payouts, however, plummeted
over 21% in 2008 during the 2008 bear market and financial crisis and only recovered to hit a new all-time high last year, in 2012.
anticipate further % increases in the dividend rate in the coming years.
Investors were burned badly during the 2000-2002 and 2007-08 bear markets
and currently seem to prefer dividend increases over share buybacks. However, the % increase may be smaller in future years, given the dividend tax increases that the Obama administration pushed through Congress in 2012.
***An updated version of this chart containing data from 1977-2014 may be found in this post.