Newspaper article International Herald Tribune

Dividends Making a Comeback

Newspaper article International Herald Tribune

Dividends Making a Comeback

Article excerpt

Dividend payments are gaining in popularity among American companies, but they are still not close to being as common as they were in the 1980s.

Dividend payments are gaining in popularity among American companies, but they are still not close to being as common as they were in the 1980s, before a fascination with technology companies and potential capital gains led many investors to view dividend payers as stodgy and boring.

But while overall dividend payments have continued to rise this year, a growing number of companies are being forced to reduce or eliminate their payouts.

Standard & Poor's Dow Jones Indices calculated that at midyear, 54 percent of American companies with market values of at least $100 million were making dividend payouts, up from 52 percent at the end of 2012.

As can be seen in the accompanying charts, that is the highest figure for such companies since 1994, when it was also 54 percent.

The figure fell as low as 38 percent at the end of 1999, at the height of the technology stock bubble.

"In the late 1990s," recalled Howard Silverblatt, the senior index analyst at S.&P. Dow Jones Indices, "dividends were the kiss of death," and few companies wanted to start paying them.

Investors were more interested in possible capital gains, and executives preferred share repurchases, which could raise the share price and make their stock options more valuable. "Then we got the recession" of 2001, Mr. Silverblatt said. In 2003, Microsoft and Qualcomm began paying dividends, and Congress changed the tax law to reduce taxes on dividends.

Among smaller companies -- defined as having a market value of less than $100 million -- the proportion making dividend distributions has always been smaller, but it too is growing.

The current figure, 31 percent, is up from 28 percent at the end of last year and is higher than at any time since 1984.

The figures cover all common stocks traded in the leading American markets: the New York Stock Exchange, the American Stock Exchange and Nasdaq.

They exclude depository receipts on foreign stocks, as well as publicly traded partnerships.

The charts also show the annual rate of dividend payments at the end of each year, or, in the current period, at the end of June. …

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