Standard and Poors announced that dividend hikes fell to just 191 in the quarter ended September 30th while 113 companies cut or eliminated their payouts.
Since 1955 every year saw more increases than reductions with the average ratio being 15:1 in favor of higher payouts.The chart below shows the details from the third quarter of the past two years.
Because dividend adjustments are a lagging indicator, periods with poor dividend fundamentals (like 2008-2009) are often great buying opportunities.
This counter-intuitive concept is similar to that used when buying cyclical stocks when their P/Es are high (due to depressed earnings at the bottom of economic cycles).
Here’s a less than stellar commentary on the wisdom of corporate Boards….
Standard & Poors report on corporate share buybacks indicates poor timing in the execution of these programs among S&P 500 companies.
Here are the past three years of data for S&P 500 company buybacks (Q3 2009 numbers are not yet available).
When stocks were high buybacks were rampant. As shares got progressively cheaper in 2008 and 2009 buybacks slowed dramatically.
Corporate boards were just as bad in their market timing as most of the so-called emotional small investors who traditionally buy high and sell low.
Since 1955 every year saw more increases than reductions with the average ratio being 15:1 in favor of higher payouts.The chart below shows the details from the third quarter of the past two years.
S&P’s 7000 Company Universe | Q3 2008 | Q3 2009 |
Dividend Increases | 346 | 191 |
Dividend Cuts/Omissions | 138 | 113 |
Increases/Reductions | 2.51x | 1.69x |
Because dividend adjustments are a lagging indicator, periods with poor dividend fundamentals (like 2008-2009) are often great buying opportunities.
This counter-intuitive concept is similar to that used when buying cyclical stocks when their P/Es are high (due to depressed earnings at the bottom of economic cycles).
Here’s a less than stellar commentary on the wisdom of corporate Boards….
Standard & Poors report on corporate share buybacks indicates poor timing in the execution of these programs among S&P 500 companies.
Here are the past three years of data for S&P 500 company buybacks (Q3 2009 numbers are not yet available).
S&P 500 – Share Buybacks | |
Q3 – 2007 [near DJIA all-time high] | $172 billion [all-time high] |
Q2- 2008 | $87.9 billion |
Q2 - 2009 | $24.2 billion |
When stocks were high buybacks were rampant. As shares got progressively cheaper in 2008 and 2009 buybacks slowed dramatically.
Corporate boards were just as bad in their market timing as most of the so-called emotional small investors who traditionally buy high and sell low.
