Dividends for S&P companies will probably plunge most since 1942

This is S&P's own forecast.


http://www.bloomberg.com/apps/news?pid=20601213&sid=aeStJwRNjrjc&refer=home

S&P 500 Dividends May Decrease 13.3%, Most Since 1942 (Correct)
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By Cristina Alesci

Feb. 6 (Bloomberg) -- Dividends for Standard & Poor’s 500 Index companies will probably plunge 13.3 percent this year, the steepest annual decline since 1942, S&P forecast.

Companies in the 500-stock index are on pace to make $214.7 billion in payouts in 2009, compared with $247.9 billion, S&P projected in a statement today. The firm said 62 companies cut payouts in 2008, five times the total in 2003 through 2007.

“There isn’t any place in the equity market where there is zero risk of dividend cuts,” said Douglas Cliggott, chief investment officer of Dover Management LLC. “It was very easy for companies to raise capital and suddenly it has gotten expensive, so there is a strong incentive to hoard cash because it costs so much and uncertainty about future profitability is so high.”

The worst financial crisis since the Great Depression has lifted company borrowing costs, driving a Merrill Lynch & Co. measure to record highs in December. Corporate profits declined seven straight quarters through the period ended in September, according to the U.S. Bureau of Economic Analysis. Should earnings fall through the first half of 2009 as analysts project, that would be the longest stretch since the government began tracking quarterly data in 1947.

“Unless companies believe that their financial future will improve, their need to conserve cash will outweigh their desire to pay dividends,” Howard Silverblatt, a New York-based index analyst at S&P, said in today’s statement.

Macy’s, Pfizer

In the fourth quarter of 2008, companies announced a $15.9 billion reduction in dividends, the biggest drop in history, according to Silverblatt. This year, companies including Newell Rubbermaid Inc., Rowan Cos. and Macy’s Inc. have reduced or eliminated $13.5 billion in payouts, he said. Pfizer Inc., the world’s largest drugmaker, froze its payout in December after 41 years of increases.

The majority of companies that slashed dividends so far this year are financial institutions, according to S&P data. Other industries may take the lead as the economy worsens, dragging down earnings, Cliggott said. The U.S. Labor Department reported today that the unemployment rate reached the highest level since 1992 in January.

Silverblatt’s estimate for a 13.3 percent decline in dividends “gears toward the optimistic side,” he said. “A pessimistic look takes the number to 20 percent.”

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net.

 

THey should be plunging 50%.

wtf is this about dividends? cut them off.

 

1942 made a nice bottom

 

Took them awhile to report this.

Gnome, I and others were tossing this around, a few months ago.

DOW at 3 to 4K if historical PE holds.

Maybe the grand poobah can elucidate a bit.

 

boo hoo hoo no need for dividends when you can just buy goog and aapl