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 A1,518.73 USD0.35
Amgen Inc223.48 USD0.20
Apple Inc324.95 USD0.02
Berkshire Hathaway Inc B226.80 USD0.15
Cisco Systems Inc46.97 USD-0.74
Comcast Corp Class A46.09 USD0.04
ConocoPhillips58.62 USD-0.34
Facebook Inc A214.18 USD0.49
Gilead Sciences Inc67.56 USD1.14
Kinder Morgan Inc Class P22.00 USD0.27
Medtronic PLC117.33 USD0.43
Microsoft Corp185.35 USD0.89
Oracle Corp55.47 USD0.29
Procter & Gamble Co126.14 USD0.94

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.