A Snapshot Of Dividend-Payers & Non-Payers In The S&P 500 Index

View from the Observation Deck  
  1. One of the ways in which S&P Dow Jones Indices tracks the performance of the constituents in the S&P 500 Index ("index") is by separating those that pay a dividend from those that do not. 
  2. Companies that do not pay a dividend tend to be more growth-oriented, in our opinion. As of 3/29/19, 418 of the index members distributed a cash dividend to shareholders, according to S&P Dow Jones Indices.  
  3. The number of S&P 500 companies that distribute dividends fluctuates over time. Since 2002, the numbers have ranged from a year-end low of 351 in 2002 to a year-end high of 423 in 2014.
  4. While the S&P 500 Index is capitalization-weighted, constituents are equally-weighted in this comparison. 
  5. The average market cap of the constituents in the S&P 500 Index was $49.0 billion as of 3/29/19, according to S&P Dow Jones Indices. For comparative purposes, the 50 largest companies in the index had an average market cap of $245.5 billion. 
  6. From 2002-2018, the dividend-payers outperformed the non-payers, on a total return basis, in 10 of the 17 calendar years. Payers are lagging year-to-date through Q1'19. 
  7. With respect to the non-payers, two years in the table stand out: 2003 and 2009. Both marked the first year of a new bull market, which helps explain the huge disparity in performance over the dividend-payers, in our opinion.
This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently 505) used to measure large-cap U.S. stock market performance. 

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Posted on Tuesday, April 9, 2019 @ 3:23 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.