Dividends per share rising for companies in the S&P 500 while payout ratios are falling

Aggregate dividends per share (DPS) in the S&P 500 continued to recover from the recent low in Q1 2010 ($21.52) on a trailing twelve-month basis. Despite the growth in index-level DPS, the Q3 2011 value of $25.39 was only 10% above the ten-year quarterly average. On the other hand, earnings per share (EPS) on a TTM basis in Q3 2011 were $91.85—nearly 40% above the ten-year quarterly average. This discrepancy in growth of DPS and EPS has led to a decline in the S&P 500 payout ratio. The index level payout ratio stood at 28% at 3Q 2011, nearly 10% below the ten-year quarterly average.

At the sector-level, Telecommunications Services (73%) and Utilities (58%) sectors had the highest dividend payout ratios. In examining ten-year average dividend payout ratios, there are a number of sectors with significant discrepancies between their Q3 2011 ratios and their ten-year quarterly average ratios.

However, these discrepancies are largely due to periods when earnings for certain sectors were particularly weak. An examination of the year-over-year growth rate in payout ratios shows that five sectors have experienced an increase in payout ratios, but the declining sectors more than offset them at the index-level. As of Q3 2011, the S&P 500 payout ratio was down 5% year-over-year. 

Read more about the dividend trends of companies in the S&P 500 in this quarter's edition of FactSet Dividend Quarterly.

All of the data used to compile FactSet Dividend Quarterly is available in the FactSet workstation.