We find that while recessions tend to lower the number of companies paying dividends while they're ongoing, which we would expect, we find that the bigger driver of what affects the number of companies paying dividends to individual shareholders, retirement and pension plans, et cetera would appear to be the relative tax rate of dividends with respect to capital gains.
Looking at the overlap of historic data and old forecasts, we see that the future vision of investors in December 2010 looking forward to the end of 2012 appears to closely match how things have actually played out over time.
I'm not saying you should have a portfolio of just two or three holdings. But at the same time, I'm not at all concerned with having a portfolio of dozens of holdings that represent every sector of the market.
Looking at the trailing year data, there seems little to be concerned about for 2013, however that might change rapidly should the the currently expected lackluster quarterly dividend growth for 2013 continue much longer.
In this chart, we see that compared to our snapshot from 19 January 2012, investor expectations for earnings in 2012 have dimmed, especially for the first three quarters of the year. Meanwhile, they appear to expect that 2013 will provide a much better environment for the S&P 500's earnings per share.
On Friday, 18 May 2012, the state of order that had existed in the stock market since 4 August 2011 came to an end.
Here are our three favorite charts showing the relationship between stock prices as represented by the S&P 500 and their underlying dividends per share.
Back in the days of the Soviet Union, there was a whole field within political science known as "Kremlinology", where people outside the ruling circle within the Kremlin would attempt to divine what was really going on in that nation from what little information the country's bosses made public in the media they controlled.
I recall the old pit opening up at the old CME building. It’s a health club now. There wasn’t any room to move, and because of the popularity of that contract and the interest rate quadrant there wasn’t any room to put people on the floor.
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