Dividends Surge, But Payouts Still Low

For all the rush to issue dividends in the fourth quarter, ahead of an expected tax increase in the New Year, U.S. companies still look more keen to hug their cash than distribute it to investors. According to Howard Silverblatt, senior index analyst at Standard & Poor’s, the payout rate among U.S. dividend payers is just 36 per cent – near its low point and still well below the historical average of 52 per cent. The rate compares dividend payouts with income.

To be sure, this low payout reflects a conservative economic outlook on the part of corporate America, rather than companies ignoring the demands of investors. And it comes as something of a surprise, given that companies have been more than eager to raise their dividends and distribute them earlier than expected to put investors ahead of a tax increase by Washington.

Source: Globe and Mail

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