Across My Desk: Dividend Growth Slows During Second Quarter
For fans of dividend income - once an important reason for buying stocks in the first place - the news is not so hot.
According to a Standard & Poor's Press Release:
448 of the approximately 7,000 publicly owned companies that report dividend information to Standard & Poor's Dividend Record increased their dividend during the second quarter of 2007, representing a 7.2% decline from the 483 issues that raised their dividend during the second quarter of 2006.
"The decline in dividend increases is disturbing, especially in light of continued, moderate earnings growth and the abundance of corporate cash," says Howard Silverblatt, Senior Index Analyst at Standard & Poor's. "We believe the present wave of corporate buybacks is contributing to the slower pace of dividend growth in 2007."
Standard & Poor's Dividend Record shows that dividend extras picked up steam during the second quarter of this year posting 92 extras versus 89 during the second quarter of 2006. The total number of dividend payers is also on the rise. Through June of this year, nearly 3% more issues declared dividends than this time last year.
Standard & Poor's also notes the lack of stock splits in 2007. Year-to-date through June, 259 common issues have split compared to 360 in 2006 and 400 in 2005. "Stock splits traditionally offset market gains. However, the lack of splits this year has caused the average share price to increase to $33.19 from $27.58 in June of 2006 and $25.76 in June of 2005. Clearly companies are becoming more comfortable with higher stock prices," concludes Silverblatt.
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