Monthly Archives: February 2009

Annus Horribilis Continued

After a dismal January the equity markets continued their slide capping the worst two-month start to a new year in their 113-year history. The losses in February were the worst performance for a February since 1933. Stocks also closed yesterday at their lowest point since May 1, 1997. For the Dow Jones Industrial Average this was the sixth consecutive monthly drop and the index is off ~50% from its October 2007 record highs. Also, the 39% decline since August was the worst six months since the 45% decline since 1932. It should come as no surprise that the indices were led lower by the continued …

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Dividend Reductions

This will be the last of my comment on dividends (for now at least). This week alone we have seen high profile firms such as JP Morgan Chase and General Electric slash their dividends. In essence both of the companies are financials so it should be no surprise that we are seeing management in these two cases make prudent decisions to conserve cash and strengthen their balance sheet during this credit crisis.

Standard & Poor’s recently release a report expecting payment from companies in the S&P 500 Index to shrink 13.3% this year. This would represent the largest contraction since World …

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Dividends & The Power of Compounding

OK let’s just tell it like it is – this is dividend week on The Daily Dose. Our friends at SmartMoney highlighted how dividends through the power of compounding can truly make a difference in total returns. This is even true during the “Lost  Decade” we have recently experienced in stocks.

Between July of 1997 to October of 2008 the Dow Jones Industrial Average did a round trip back to 8,000. Over that same time period the price return of General Electric (GE) was a decline of 13% – truly a lost decade. However, when you factor in the dividend …

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Dividends for the Long Run

Yes this is my third consecutive entry on dividends but I am trying to emphasize their importance to the total return (capital appreciation + dividends) of a long-term oriented equity portfolio. The title to this entry is a take from the book Stocks for the Long Run by Jeremy Siegel. Last night we focused on returns dating back to 1926 and the night before was 1972. Tonight we are going to stretch the bounds of life expectancy to 200 years. The point is to stress the long-run. I realize in this volatile environment the long-term has been truncated to hours …

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Dividends Drive Returns

On the heels of my comments last night regarding the importance of dividends and how companies that grow them tend to outperform we wanted to provide a longer term time horizon for some historical perspective. According to Federated Investors, between 1926 to 2008, dividends have accounted for more than 44% of the 9.6% total return generated by the S&P 500 Index. Also, to provide additional color on the example from last night dating back to 1972 through the end of 2008, companies that paid no dividends had a total return of 0.3% versus dividend growers of 8.9%. {TJM} …

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