The Biggest Dividend Stories of 2010

We have now passed the midpoint of 2010 and investors are collectively catching their bread from the markets wild ride since the beginning of the year. Sure the S&P 500 is down only 3% this year, but that doesn’t really reflect the market swings that investors have experienced this year. At the end of April, the market was actually up over 6% and it looked like an economic recovery was in full gear. Then European debt woes, the stock market “flash crash” and the Gulf oil spill all combined to bring investors back down to reality.


So at the midpoint of this year it seems a good opportunity to review the biggest dividend stories of 2010.


The Year of the Dividend

Fortunately for dividend investors 2010 has been a stellar year. Already 10 companies in the S&P 500 index have initiated dividends this year. Last year, only 2 stocks had initiated dividends by this point in the year. And 130 stocks have increased their dividends this year.


Maybe more significantly is that only one stock has decreased their dividend this year compared to 61 in the first seven months of 2009. And only one stock has suspended their dividend this year, while 10 companies had already done so by this point last year.


BP Dividend Cut

Shortly after the oil rig explosion in the Gulf of Mexico on April 21, speculation began about a potential BP dividend cut. At first it seemed almost ludicrous that a company of BP’s size and stature would need to reduce their dividend as a result of this oil spill.


However, as the weeks continued to pass thousands of barrels of oil continued to spill into the Gulf of Mexico. Speculation that BP would need to suspend their dividend payment became almost a certainty. Rumors even began to surface that BP may not survive as a company and would be forced to either file for bankruptcy or be acquired.


Finally in mid-June, BP officially suspended their dividend. BP had been the largest dividend payer in the UK and news of its dividend suspension impacted dividend investors worldwide.


Speculation on Key Dividend Increases

This year we have already seen 130 companies increase their dividend payments. However, some key stocks have been noticeably absent from that list. Investors have been speculating all year as to when former big dividend payers JP Morgan Chase and General Electric will increase their dividend.


JP Morgan and GE were formerly staples of most dividend portfolios until both companies were forced to cut their dividends in early 2009. Now with prospects for an economic recovery in sight, investors have been very interested as to when they can expect to see dividend increases from JPM and GE.


Unfortunately even after hinting earlier that a dividend increase may be coming in 2010, JP Morgan CEO Jamie Dimon made it very clear just weeks ago that no dividend increase will be coming this year.


In March, GE CFO Keith Sherin conveyed a similar message to investors. Profits at General Electric are expected to grow again in 2011 and investors shouldn’t expect a dividend increase until then.

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