S&P; Dividend Rate Fell in 2001 for 2nd Year

U.S. companies boosted cash dividends in December at a pace only slightly off the year-ago level, but 2001 still turned out to be a dismal year for dividends overall, Standard & Poor’s Corp. said Wednesday.

The total dividend rate on the blue-chip S&P; 500 index fell 3.3% last year, the largest calendar-year decline since a 4.1% drop in 1951, S&P; said.

The rate also had declined in 2000, by 2.5%. The back-to-back decline in the dividend rate was the first since 1970-71, S&P; said.

The drop in the dividend rate reflected fewer increases and more dividend cuts and omissions by major companies. As profits plunged with the recession more companies sought to conserve cash.

S&P;, which tracks 7,500 companies, said 1,326 dividend increases were announced in 2001, down 11% from 1,496 hikes in 2000 and the fewest since 1991.

The number of dividend cuts announced came to 127, up 65% from 77 in 2000 and the greatest number since 1992. A total of 78 firms omitted their dividends entirely, up from 60 in 2000.

In December, however, 121 companies raised dividends, nearly equaling the 124 increases announced in December 2000. Even so, the number of dividend cuts for the month totaled 15, up from 10 a year earlier.

Though more companies have opted to get stingier with dividends, those that have continued to pay cash to shareholders have been rewarded with better stock performance in general.

In the S&P; 500, stocks that pay dividends fell an average of 0.1% in 2001, while shares that don’t pay dividends slumped 5.4%, on average, S&P; said.

The average annualized dividend yield of S&P; 500 stocks is about 1.36%.