div valuation now
Another sign that investors have
increasingly valued stocks based on their
dividend can be found in the dividend yield of
S&P 500 stocks which has been relatively
constant since the financial crisis.
More importantly, the difference between the dividend
yields of stocks, the dispersion, has been falling
and now sits at its lowest level in at least two
decades. This is down 15 per cent from pre-
crisis levels.
Said a diferent way, market prices
have become increasingly sensitive to changes
in dividend payouts. Unsurprisingly, managers
have paid attention and boosted them. Just
before the crisis, the average company paid out
one-third of its earnings as a dividend. Now it
pays out a half.
Furthermore, the dispersion
between dividend payments has stayed low,
meaning companies have paid attention to their
peers and increased their dividends in unison.
EU Forecast
euf:b18:153/nws-01