Trump’s tax cut windfall lifts stock dividends to new record

  • U.S. dividends hit a new record high in the first quarter even as markets fell, according to the S&P Dow Jones Indices.
  • There were no dividend cuts in the S&P 500 for the period, a first for the benchmark, according to Howard Silverblatt, senior index analyst for S&P Dow Jones.
  • "Given the record cash levels, repatriation and expected record earnings helped by lower tax rates, 2018 could post its seventh consecutive year of record payments," Silverblatt says.

The windfall from President Donald Trump's tax-cut helped push dividend payments by companies to a new record, S&P Dow Jones Indices said Tuesday.

First quarter dividend payments for the S&P 500 hit a high of $12.79 per share, one cent above the previous record set in the fourth quarter of last year.

"There were no dividend cuts in the S&P 500 for Q1 2018, an event not seen in my history (which started in 2003)," said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.

"Given the record cash levels, repatriation and expected record earnings helped by lower tax rates, 2018 could post its seventh consecutive year of record payments," Silverblatt said in a statement. "There is potential for a return to double-digit gains, last seen during 2015."

President Trump signed the Republican tax overhaul into law in December, bringing the corporate tax rate from 35 percent to 21 percent.

Major U.S. stock markets ended the first quarter in the red. The S&P 500 fell more than 2 percent in Q1, while the Dow Jones Industrial Average lost more than 3 percent.

Following the Trump administration's biggest legislative accomplishment, indicated net increases for U.S. stock dividends rose four-fold from last quarter to $18.8 billion. This quarter's net increases were up 80 percent from a year earlier, the S&P Dow Jones Indices said.

Aggregate increases hit $19.9 billion, up more than 67 percent from the same time last year. Meanwhile aggregate dividend decreases fell to $1.0 billion, down from $1.1 billion in the same first quarter of 2017.

More than 940 companies raised their yield for shareholders in the first quarter, up 7.6 percent year over year. In the past year, companies have also increased the dollar amount of dividends, the statement said. For the year ending in March, 2,709 companies increased the payout, up 4.4 percent year over year.

So far, using the current declared rate for the S&P, this year has seen a 5.5 rise in dividend payments over 2017. That number is up 2.3 percent from the year-end, with three quarters of the year yet to go, Silverblatt said.