Dividend Yield on S&P; 500 Hits Record Low Despite Growth
NEW YORK — The dividend yield on the Standard & Poor’s 500 index fell to a record low last year even though the growth in dividend increases was the highest in 15 years, S&P; said in a year-end review.
About 1,907 companies raised their dividends last year, 4% above 1994’s 1,826 increases and the most since 2,160 increases in 1981. In December, however, dividend increases tapered off to 136 from 173 a year earlier.
Dividend growth wasn’t enough to send the dividend yield on stocks higher, solely because the S&P; 500 surged 34.11% last year, the most since 1958.
Dividend increases also failed to keep pace with the growth of corporate profits, S&P; said. “It was surprising that with so many double-digit earnings gains indicated for 1995, the number of dividend increases didn’t show an even larger rise” compared with 1994, said Arnold Kaufman, an analyst and newsletter editor at S&P.;
A theoretical “share” in the S&P; 500 paid a dividend of $13.79 in 1995, only about 4.6% higher than 1994’s $13.18 payout.
In the last 67 years, average annual dividend growth in the S&P; 500 has totaled more than 6%.
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