The Worst News in 53 Yearshttp://www.fool.com/investing/dividends-income/2009/06/02/the-worst-news-in-53-years.aspx Tim Beyers
June 2, 2009
Welcome to Purgatory, Fool. Your dividends are no longer good here.
Research from Standard & Poor's shows that 288 of the roughly 7,000 public companies that report dividend information decreased their payouts during the last three months of 2008. It was the worst quarter for dividends since 1956, when S&P began collecting such data.
For the year, Capital IQ found 485 dividend reductions by companies and closed-end funds. Notable 2008 cutters included Fairpoint Communications (NYSE: FRP ) , Columbia Bancorp (Nasdaq: CBBO ) , and Warner Music Group (NYSE: WMG ) .
At least there's Prozac
Big gains in 2003, 2004, and 2006 may have altered the equation some since but, for the most part, dependable dividends continue to help produce returns, especially among blue chips. The large-cap-weighted S&P 500 index yields more than 3% as of this writing.
What we don't know is whether that yield, or any yield, is sustainable. The Great Dividend Implosion of 2008 has raised doubts. Thanks, Washington Mutual. You, too, Wachovia.
Is there any hope? Not really, says S&P analyst Howard Silverblatt. Quoting from his recent interview with the Indianapolis Star:
And the audience replied, "How insecure are they?"
In fact, it wasn't even close. Capital IQ spotted 1,744 dividend increases last year -- companies were 3.6 times more likely to raise their payout than lower it. History favors increases even more: