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 A2,831.05 USD0.24Rating
Amgen Inc214.32 USD-0.34Rating
Apple Inc146.03 USD-0.54Rating
Berkshire Hathaway Inc Class B278.22 USD0.04Rating
Cisco Systems Inc56.54 USD-0.26Rating
Comcast Corp Class A56.10 USD-0.12Rating
ConocoPhillips64.96 USD1.96Rating
Facebook Inc A347.12 USD0.33Rating
Gilead Sciences Inc71.64 USD-0.08Rating
Kinder Morgan Inc Class P16.56 USD0.39Rating
Medtronic PLC130.77 USD0.10Rating
Microsoft Corp297.78 USD-0.59Rating
Oracle Corp89.73 USD0.35Rating
Procter & Gamble Co143.96 USD-0.16Rating

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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