Is the golden era of U.S. dividend growth over?

Several factors are conspiring to thwart dividend growth.

Josh Peters, CFA 29 July, 2016 | 5:00PM
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It's provocative and possibly dangerous to call an end to an era, but I'm going to give it a try: The golden age of dividend growth is over in U.S. stocks.

Maybe you didn't even know that there had been a golden age of dividend growth, but I trace its start to 2003, when tech bellwether  Microsoft (MSFT) declared its first-ever cash dividend and the U.S. government brought its federal tax rate on dividend income in line with long-term capital gains, ending the latter's long advantage.

In 32 of the 49 quarters between the first quarter of 2003 and the first quarter of 2015, the year-over-year growth rate for dividends per share for the S&P 500 has been at least 10%: frequent enough for investors to treat double-digit dividend growth as normal, something that can be taken for granted.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alphabet Inc A2,351.93 USD0.62Rating
Amgen Inc254.21 USD1.16Rating
Apple Inc130.21 USD0.36Rating
Berkshire Hathaway Inc Class B290.93 USD0.42Rating
Cisco Systems Inc53.43 USD1.89Rating
Comcast Corp Class A58.11 USD1.98Rating
ConocoPhillips57.10 USD2.51Rating
Facebook Inc A319.08 USD-0.29Rating
Gilead Sciences Inc66.54 USD0.00Rating
Kinder Morgan Inc Class P17.84 USD1.08Rating
Medtronic PLC126.70 USD-0.47Rating
Microsoft Corp252.46 USD1.09Rating
Oracle Corp80.40 USD0.83Rating
Procter & Gamble Co135.15 USD0.01Rating

About Author

Josh Peters, CFA

Josh Peters, CFA  Josh Peters, CFA, is a portfolio manager for Morningstar’s Investment Management group and edits the monthly newsletter Morningstar® DividendInvestorSM.

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