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Stingy Investor Tip Sheet
in the Economist discusses opportunities in the dividend swap market.
But, as a regular dividend investor, I was alarmed when the author
revealed that "American dividends more than halved between 1929 and
1931." That's a whopper of a dividend decline.
It also reminded me that I have data for the S&P500 (or more
accurately its predecessor indexes) close at hand. So, I took a look
at the dividend carnage by creating two graphs. The first graph shows
the absolute value of the S&P500's dividend payments in the early
years. The second shows its dividend yield.
As you can see, the Economist was right. Dividend payments declined
precipitously after a peak in 1930. From top to bottom, the S&P500's
dividend rate plunged from a high of $0.98 at the end of 1930 to a
low of $0.44 at the end of 1933.
The big dividend-yield spike in 1932 occurred when the dividend
payments had already fallen to $0.66. It also happens the highest
yields coincided with the bottom of the 1929-1932 bear market.
As a fan of dividend stocks, I sure hope we don't see similar dividend
reductions this time around.
|02/02/2009 11:45 PM EST Permlink save & share||Dividends|
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