Soaring Dividends During A Debt Crisis Don’t Mean Much

What do soaring dividends in 2011 suggest?

• The return of investor confidence?


• The economy is strengthening?


• Stocks are a good buy?

History says that soaring dividends during debt crisis reflects none of the above. Dividends soared into 1938, yet real (currency adjusted) equity prices did not overcome the 1929 highs until 1958.

Dividend Yield vs S&P 500:


U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to Gold Ratio and Z Scores from Primary Trend:


Headline: Dividends come roaring back in 2011

Big companies increased their dividends by a record amount in the first quarter. Since the start of the year, 117 companies in the Standard & Poor's 500 index said they would raise or start paying dividends. The value of the new and raised annual dividends announced by these companies amounted to a record $16.6 billion, according to Howard Silverblatt, senior index analyst at S&P. Just 78 companies raised their dividends in the same period a year ago.

Source: finance.yahoo.com