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By Matthew Quinn
Standard & Poor's announced Monday that of the approximately 7,000 publicly owned companies that it tracks, only 48 decreased their dividend payment during the first quarter of 2010, compared to 399 companies that raised their dividends.
That's a dramatic improvement from the record 367 that lowered their dividend payment in the first quarter of 2009. Only 283 companies increased their dividend that same quarter.
The increased number of dividends resulted in a net positive payout of $6.4 billion in the first quarter of 2010, compared to $43.8 billion in reductions recorded in first quarter of 2009—the worst dividend quarter in history.
"The first quarter represents a rebirth of dividends in the US domestic market and speaks to the higher confidence that boards of directors are placing in both the economic recovery and their future earnings ability," said Howard Silverblatt, senior index analyst at S&P Indices, in a press release.
The numbers certainly suggest that companies are once again looking for ways to return cash to shareholders after hunkering down through the economic downturn.
US firms are forecasted to nearly double their spending on stock repurchases to $235 billion in 2010, according to Bloomberg, citing data from Mizuho Financial Group.
Data released by S&P last week showed that in the fourth quarter of 2009 stock buybacks surged 37.2 percent to $47.8 billion from the third quarter and nearly double the record low spent on share repurchases spent in the second quarter.
But as CFOZone pointed out last week, the increased buybacks in the fourth quarter was primarily the result of companies heading off possible earnings dilution due to an anticipated increase in the number of employee-exercised stock options.
As Malcolm Polley, chief investment officer at Stewart Capital Advisors told Bloomberg, "Buybacks are simply a means of keeping dilution to a minimum. Most companies have tended to buy back their stock at any price."
Indeed, the increase in buybacks wasn't enough to offset share sales and option exercises, as the share count among S&P 500 companies rose 4.5 percent in the final three months of 2009 compared with the third quarter, Bloomberg said.
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