S&P 500 companies issued $485bn in 2019 dividend payments

Dividends could return to double-digit growth rate in 2020, analyst predicts.

  • By Mamta Badkar,
  • Financial Times
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

American companies shelled out nearly half a trillion dollars in dividend payments last year — the eighth consecutive year of record payments — furnishing investors with income alongside stellar returns.

The S&P 500 (.SPX) paid an aggregate $485.48bn to shareholders, up 6.4 per cent from a year ago, according to S&P Dow Jones Indices. However, that was slower than the 8.7 per cent increase in 2018. On a per share basis, the index paid a record $56.24 last year.

“US dividends continued upward in Q4 2019 even as the rate of growth slowed from the prior year when companies cited their tax savings in their statements,” said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.

In the fourth quarter, aggregate increases totalled $11.97bn, up 1 per cent from the fourth quarter of 2018. By comparison, cuts fell by more than two-thirds to $1.35bn from Q4 2018, which included industrial conglomerate General Electric’s (GE) $3.8bn chop. Companies typically avoid dividend cuts when possible, as they signal that the board of directors and management see long-term earnings power diminishing.

The 2019 payouts came during a strong year for US stocks that saw the S&P 500 climb to fresh peaks and post its biggest annual gain since 2013 as trade war fears receded and amid supportive policies from the Federal Reserve and global central banks.

Indeed the Fed’s mid-cycle policy adjustment last year, which saw the central bank cut interest rates following three years of rate rises, boosted the appeal of dividend paying stocks to income hungry investors, making them more attractive than lower yielding bonds.

Looking ahead, Mr Silverblatt said the S&P 500 “already has a 3.3% dividend increase built into 2020” and added “absent a major event or Washington policy change, dividends could return to their double-digit growth rate, rewarding income-seekers in an otherwise lacklustre income environment”.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

For more news you can use to help guide your financial life, visit our Insights page.


© The Financial Times Limited 2020. All Rights Reserved.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.