Political  Calculations

Prompted by the desire to avoid higher taxes on dividends as part of President Obama's desired tax hikes on investment income in 2013, a record number of U.S. companies acted to pay out record levels of dividends in the final quarter of 2012 [Excel spreadsheet] .

Here is the basic rundown from Standard and Poor's Dividend Action Report [Excel spreadsheet]:

  • 4,002 U.S. companies made announcements regarding their dividend policies in December 2012, a new record. The previous record was 3,716 declarations which was set in December 2011.
  • 483 of these companies announced they would pay an extra, or special, dividend before the end of 2012, also a new record. The previous record of 233 extra dividends paid out in one month was set in December 2007, just as the U.S. economy was entering into recession.
  • 124 companies announced they would increase their regular dividends going forward.

And now for the kicker. In December 2012, 93 U.S. companies announced that they would be cutting their regular dividends going forward, also a new record. The previous record of 81 companies announcing dividend cuts in a single month was set in March 2009, as the U.S. stock market was hitting bottom during the "Great Recession".

Our chart below puts the number of dividend cuts being announced in December 2012 into perspective.

Political Calculations

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