The chart shown below (click on the chart to see a larger image) annual dividend payouts for the S&P 500 Index between 1977 and 2013. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $34.99 in 2013. This is a total increase of about 649% and an annualized increase of 5.75% in the dividend yield. This an impressive annualized increase considering that this time period includes several sharp bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09. During the last two bear markets, the S&P 500 Index lost more than 50% of its value.
shown, the annual dividend payout amounts increased very
rapidly during the late 70s-early 80s likely 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,
over 21% in 2008 during the 2008 bear market and financial crisis and
only recovered to hit a new all-time high in 2012. The annual dividend payout of the S&P 500 Index increased by double digits during each of the past three years and was about 53.9% higher in 2013 than it was in 2010.
still anticipate further % increases in the dividend rate in the coming years. Investors were burned badly during the 2000-2002 and 2007-08 bear
and currently appear 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.