Some Companies that have RAISED their dividends:

[FinanceDude]

the monthly issue of my newsletter came out this morning and they have DJIA dividends going back almost 100 years as part of it.

The average since around 1900 has been above 3%. 2000 the DJIA was at around 1.5%. Last year's DJIA peaked at a 3% dividend yield which has been the peak at previous bear markets where stocks would lose value until dividends went up.

Average bear market bottom has been 6% to 7% dividend yield for the DJIA. 1932 was almost 15% dividend yield. some of the smaller bears have bottomed at 4% to 5% yield.

Historically the DJIA has peaked when the dividend yield fell to 3% so there is an argument that we can go lower or stay at this level for a long time until dividends go back up to historical averages

So our best hope to avoid the "bear trap" is to buy those contrarian stocks that are RAISING their dividend in a bear market. Some things never change, but luckily NOT everyone follows this approach........

 

[al_bundy]

actually it's to stay in cash until things sort themselves out and take advantage of higher yields that will most likely come in the near future

 

[Zathras]

FD, I think I missed out on the first part of the conversation you are having.
That said, why would you not at least consider a company which has a strong enough performance in a bear market to increase its dividend?
Seems to me that type of strength would be worth looking into as long as the dividend payout ratio doesn't go crazy.

 

[FinanceDude]

FD, I think I missed out on the first part of the conversation you are having.
That said, why would you not at least consider a company which has a strong enough performance in a bear market to increase its dividend?
Seems to me that type of strength would be worth looking into as long as the dividend payout ratio doesn't go crazy.

Am I posting in a weird manner, that's exactly what I am suggesting...... When a company can RAISE its dividend in a bad market, that's a plus. Its easy to raise your dividend in a good market. Based on yesterday's announcement, Exxon should be raising their dividend by $1 a share...........but they won't........

 

[al_bundy]

you can argue exxon's earnings won't be as good in the future due to falling oil and gasoline prices and so they won't raise dividends

 

[FIRE'd@51]

the monthly issue of my newsletter came out this morning and they have DJIA dividends going back almost 100 years as part of it.

The average since around 1900 has been above 3%. 2000 the DJIA was at around 1.5%. Last year's DJIA peaked at a 3% dividend yield which has been the peak at previous bear markets where stocks would lose value until dividends went up.

Average bear market bottom has been 6% to 7% dividend yield for the DJIA. 1932 was almost 15% dividend yield. some of the smaller bears have bottomed at 4% to 5% yield.

Historically the DJIA has peaked when the dividend yield fell to 3% so there is an argument that we can go lower or stay at this level for a long time until dividends go back up to historical averages

Shouldn't you really look at these yields relative to money market rates? For example, at the 2003 bottom the yield on the DJIA was higher than that of a money market fund, as is the case today.

 

[al_bundy]

true and there has been a gradual drop in yields and interest rates in general since the early 1930's

if you draw a channel line from the high's and lows starting from the 1920's then yields went below the channel line in the early 1990's and are now just popping back into the long term trend.

if you combine this with the predictions of rising rates in the future than you can make an argument that dividends will go back to the 4% to 6% range in the coming years. and a top around 9% in the middle of the next decade would not be out of the question

Of course there is no mention of stock buybacks. i don't know how prevelant they were in 1929 - 1932 and the 1970's but lately the low dividend rate could possibly be because companies have been buying stock for the last 15 years or so when the dividend rate went below it's long term trend line and the chart i saw this morning courtesy of Barron's doesn't include this as part of their calculations

personally i don't agree with a lot of their predictions like the DJIA going to 400, but Bob Prechter has made enough good predictions over the last 30-40 years to pay attention to what he says.

One interesting trend i noticed is this. if you look at the stock market of almost every emerging market over the last 10 years it's like the USA circa 1929. A huge move up and then a crash. And back in 1929 we were an emerging market. Compare this with the British, French, German, SP500 and a few other markets of developed nations that aren't dependent on commodities and they all have a double top over the last 10 years. Makes me think the worst we'll see is either just below the October 10th lows or maybe 10% below the 2002 lows next year or 2011 and then a rocky move up like 1973 - 1982 and then another bull market.

 

[FinanceDude]

I'm not as acute on the Dow stock yield as the S&P 500 dividend yield. I have a chart on my wall from 1926 to 2007, and here are the average dividend yields by decade:

1930's - 4.5%
1940's - 5.7%
1950's - 4.9%
1960's - 3.2%
1970's - 4.0%
1980's - 4.2%
1990's - 2.4%
2000-2007 - 1.6%

It appears from 1990 on, the dividend yield on S&P 500 stocks have been steadily falling.........

 

[Zathras]

Am I posting in a weird manner, that's exactly what I am suggesting...... When a company can RAISE its dividend in a bad market, that's a plus. Its easy to raise your dividend in a good market. Based on yesterday's announcement, Exxon should be raising their dividend by $1 a share...........but they won't........

Ah, my apologies. I understand now.
And yes, Exxon should raise their dividend in my opinion as well

 

[haha]

you can argue exxon's earnings won't be as good in the future due to falling oil and gasoline prices and so they won't raise dividends

You can argue almost anything. Usually it is meaningless.

Ha