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More companies cut dividends in 1Q


A record number of companies cut their dividends during the first quarter, while a record low decided to increase their dividend payments, the Associated Press reported.

According to Standard & Poor’s, this is the first time dividend decreases have outpaced increases since it started tracking data in 1955.

Among the 7,000 publicly traded companies that report dividend data to S&P, 367 decreased their dividend payments in the first quarter, which is more than quadruple the number of dividend cuts in the same quarter of 2008, when only 83 companies cut dividend payments.

“It’s not surprising at all” that some companies would be cutting dividends, said Don Wordell, portfolio manager of the RidgeWorth Mid-Cap Value Equity fund. “The economic environment is very, very bad. … Many companies were paying dividends on unrealistic earnings expectations.”

Total dividend payments decreased by $77 billion during the quarter, with most of the dividend cuts taking place in the financial services sector by banks that are trying to preserve as much capital as they can.

Howard Silverblatt, S&P’s senior index analyst, said in a statement that he believes the worst is over and that the bulk of dividend cuts have already been completed.

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