Thumbs Up: Fatter Dividends

Physician's Money Digest, October31 2003, Volume 10, Issue 20

Perhaps because of the new taxbreaks on dividend income, 2003 ison its way to becoming the best yearfor total dividend payments on theS&P 500 since 1999, with the best percentageincrease in total dividendssince 1996. Still, despite that growth,the dividend yield on the S&P 500 islikely to remain below 2% for the 11thstraight year. The addition of moretechnology stocks to the S&P 500 duringthe 1990s has lowered the yield,since most tech companies don't paydividends. Analysts also predict thatfew tech companies will join Microsoft,which recently paid its first-ever dividend.Those views cause some marketobservers to doubt that the dividendtax cut is a prime mover in the currentstock market rally, since technologystocks are leading the way.