Baseball Crank
Covering the Front and Back Pages of the Newspaper
June 21, 2004
POLITICS/BUSINESS: Paying Dividends

A DC-based lobbying outfit called the American Shareholders Association has produced a study showing a sharp increase in payment of dividends following the dividend tax cut:

According to the latest ASA analysis of S&P 500 dividend data, favorable dividend activity among S&P 500 companies increased 55.2 percent since the tax cut was enacted. A total of 298 favorable dividend actions (increases and initiations) were taken on the S&P 500 compared to just 192 in the previous 12 month period. 19 more companies are paying a dividend than before the tax cut and companies increased their dividend 277 times. As a result, $185 billion of cash will be returned to S&P 500 shareholders in 2004.

The group's head argues that this is good corporate governance, given that unlike reported earnings, cash dividends can't be faked:

"More cash in shareholders pockets is disciplining managers to undertake only the most productive investments. This has re-elevated shareholders to be true owners of the corporations they invest in and has improved corporate governance more than any regulation passed by Congress or the Securities and Exchange Commission."

Posted by Baseball Crank at 6:17 AM | Business • | Politics 2004 | Comments (3) | TrackBack (0)
Comments

I only buy stocks if they have a dividend these days - it provides an extra check on the company. You don't have to rely on a company's earnings report to see if it's taking; you can just see if it cut its dividend.

Posted by: Zach at June 21, 2004 12:22 PM

You gotta be kidding me. This is ground breaking research!

Dividend payments have gone up during periods of high profit growth? Get out of here! This is correlation without causation.

Posted by: Adam at June 27, 2004 1:18 PM

Yeah, I thought of the fact that this could be just as attributable to a rising economy. Not that that's any worse for defenders of the Bush economic record.

Posted by: The Crank at June 27, 2004 9:38 PM
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