Dividends are the lifeblood of income investing. With interest rates as low as they've been, it's hard for those who need steady income from their portfolios to rely on fixed-income securities like bonds or bank CDs to give them the cash flow they need. Dividend stocks have been the answer for many investors, and what's best for shareholders is when those dividend payments rise steadily over time.

Overall, the healthy U.S. stock market has been good about giving investors the dividend increases they want. However, the trends haven't been as favorable in 2019 as they were last year. As S&P Dow Jones Indices just revealed, the net increase in quarterly dividends paid by U.S. stocks for the three months ending Sept. 30 was down year over year, falling to $14.6 billion from $19.2 billion in Q3 2018. That marked the third quarter in a row of declines compared to previous-year figures.

Graph showing net increase in dividends paid over time

Data source: S&P Dow Jones Indices. Chart by author.

It would be tempting to conclude that companies are being stingier with their money because economic prospects aren't as favorable as they were this time last year. However, there are other factors at play as well. One contributing factor to 2018's big dividend growth explosion was that corporate tax cuts freed up a lot of additional cash somewhat unexpectedly. Although many companies used the money for other purposes, such as stock repurchases or paying employee bonuses, dividend increases also got tied to the anticipated permanent increase in corporate income.

To be fair, the growth rate is still impressive. S&P Dow Jones Indices said that dividend payments among S&P 500 stocks in 2019 are on track to rise 8% over 2018 levels, and it anticipates that the fourth quarter will help extend the index's streak to eight straight years of record dividends on a per-share basis.

For now, healthy conditions for the U.S. economy are making it possible for companies to keep boosting their quarterly payouts. If the economy starts to turn downward, then you can expect to see fewer dividend increases and a rising number of decreased or suspended dividend payments. That's all part of the cycle of dividend investing, and if you're an income investor, it's best to get used to the ups and downs you'll see in payouts over long periods of time.