View from the Observation Deck

1. The chart above offers a nice before and after look at the recovery in the stock dividends distributed by the companies in the S&P 500.
2. Quarterly dividend payouts did not surpass the $57.8 billion average (see chart) until Q2'11.
3. The $67.3 billion in S&P 500 dividend payouts in Q2'12 eclipsed the $67.1 billion in Q4'07 (prior to crisis).
4. Companies have the capital to raise their payouts. Non-financial firms in the S&P 500 hold a near-record $1.12 trillion in cash.
5. The dividend payout-ratio (% of a dollar's worth of earnings paid out as a dividend) for these companies has been in the 30-35% range for a few years. Historically, the ratio has been closer to 50%.
6. Demand for equity income remains robust. Lipper data shows that the Equity Income fund category reported net inflows totaling $20.3 billion year-to-date through August.
7. That is by far the most for any U.S. Diversified Equity fund category. The entire universe of U.S. Diversified Equity funds reported net outflows totaling $27.6 billion.