Thursday, 22 December 2016

In recent years, stock markets have been extremely volatile in the U.S. and around the world.

October 2007 to March 2009

From October 2007 to March 2009, U.S. stocks lost more than half their value, and in many markets around the world, the results were even worse

Those declining stock values mirrored the state of the world economy, as country after country slipped into a deep recession.

U.S. firms responded by cutting dividends.  Standard &Poor's reported that a record number of firms cut their duvidend payment in the first quarter of 2009, and a record low number announced plans to increase their dividends.

March 2009 to April 2011

From March 2009 low, the U.S. stock market nearly doubled ovee the next 2 years, hitting a post-recession peak in April 2011.   The run up in stock prices coincided with an increase in dividend payouts.

Of the 500 firms included in the S&P 500 stock index, 154 increased their dividend payment in 2010 or 2011, compared to just 3 firms which cut payments over the same period.

April of 2011 to April 2012

The good news for stocks didn't last very long.  In the spring of 2011, concern about a looming economic crisis in Europe sent U.S. stocks lower again.   The S&P 500 Index fell by more than 17% from April to August in 2011.  The market largely recovered its losses over the next year.

Dividend Aristocrats

Throughout this volatile period, some companies managed to increase their dividends each year.   Standard and Poor's tracks the performance of a portfolio of firms that it calls "dividend aristocrats" because these firms have managed to increase their dividends for at least 25 consecutive years.

Including household names such as Johnson & Johnson, Exxon Mobil and AFLAC, the dividend aristocrat index displays ups and downs that mirror those of the overall market, but at least investors in these firms have enjoyed consistently rising dividends.

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