A Snapshot Of Dividend-Payers & Non-Payers In The S&P 500 Index

Bob Carey
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A Snapshot Of Dividend-Payers & Non-Payers In The S&P 500 Index

Posted Under: Stock Dividends

View from the Observation Deck

One of the ways in which S&P Dow Jones Indices tracks the performance of the constituents in the S&P 500 Index is by separating those that pay a dividend from those that do not.
While the S&P 500 Index is capitalization-weighted, constituents are equally weighted in this comparison.
As of 4/30/18, there were actually 505 stocks in the index and 415 of them distributed a cash dividend to shareholders. Companies that do not pay a dividend tend to be more growth-oriented, in our opinion.
The number of S&P 500 companies that distribute dividends fluctuates over time. Since 2002, the numbers have ranged from a year-end low of 351 in 2002 to a year-end high of 423 in 2014.
From 2002-2017, the dividend-payers category outperformed the non-payers category, on a total return basis, in 10 of the 16 calendar years, but lagged year-to-date through April 2018.
With respect to the non-payers, two years in the table stand out: 2003 and 2009. Both marked the first year of a new bull market, which helps explain the huge disparity in performance over the dividend-payers, in our opinion.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

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Posted on Tuesday, May 22, 2018 @ 1:14 PM • Post Link

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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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