S&P 500 Dividends (1977-2016)

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 2016. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $45.70 in 2016. This is a total increase of about 879% and an annualized increase of 6.02% in the annual dividend payout. This an impressive annualized 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 bad, as the SP 500 Index lost more than 50% of its value during each. 

As 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.  The annual dividend payout of the S&P 500 Index has increased substantially since the end of the Financial Crisis and was about 103.93% higher during 2016 than it was during 2009. 

There will likely be further % increases in the dividend rate in the coming years. Given that investors were burned badly during the 2000-2002 and 2007-08 bear markets , and generally prefer dividend increases over share buybacks.  The Federal Reserve recently announced that all major U.S. banks passed requisite financial stress tests and approved plans to allow those banks to use capital to  allocate extra capital for stock buybacks, dividends and other purposes.  Accordingly, there is a strong likelihood that financial components of the S&P 500 Index will substantially increase dividends in the near future.