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

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 A1,423.63 USD0.24
Amgen Inc224.02 USD-0.35
Apple Inc320.46 USD0.74
Berkshire Hathaway Inc B184.79 USD-0.53
Cisco Systems Inc45.70 USD-0.58
Comcast Corp Class A39.70 USD-0.59
ConocoPhillips44.08 USD-1.32
Facebook Inc A228.35 USD-0.34
Gilead Sciences Inc76.00 USD1.47
Kinder Morgan Inc Class P15.93 USD-0.28
Medtronic PLC98.48 USD2.58
Microsoft Corp181.72 USD-0.05
Oracle Corp53.40 USD0.37
Procter & Gamble Co116.13 USD1.97

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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