Money gone: Dividends lost in 2009 already top 2008 cuts

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Today’s bear-market milestone: With Wells Fargo & Co.’s long-expected decision to slash its dividend, the wipeout of dividend income by companies in the Standard & Poor’s 500 index this year already has surpassed what was eliminated in all of 2008.

Forty-one companies in the S&P 500 have cut their dividend payouts this year, with the total reduction equivalent to $40.8 billion a year in cash lost to shareholders, according to Howard Silverblatt, senior analyst at S&P in New York.

In all of 2008, there were 61 cuts by S&P 500 companies totaling $40.6 billion in lost dividend income.

Dividend cuts make investors that much poorer, compounding the decline in their stocks’ value and adding to the ‘reverse wealth effect’ in the economy: The poorer you feel, the less you’re likely to spend.

Unfortunately for weary shareholders, more cuts are coming, Silverblatt said.

‘We expect decreases to continue as companies take the prudent steps to preserve cash that assist in their ability to ride out the recession,’ he said.

Never mind about investors’ ability to ride out the recession. . . .

In the banking sector, Wells was the last of the Mohicans: With its cut, not a single financial company remains in the S&P 500 list of the top 25 dividend payers, in terms of total dollars paid out annually.

The largest single dividend payer is AT&T. Its $1.64-a-share annual dividend (a current yield of 7.4%) is worth a total of $9.6 billion a year to shareholders.

No. 2 on the list: Exxon Mobil Corp., which pays out $8.1 billion a year. The company’s annual dividend rate is $1.60 a share, for a 2.6% current yield.

No. 3 is Chevron Corp., with an annual dividend per share of $2.60 and a total annual payout of $5.3 billion. The stock’s dividend yield is 4.5% at the current price.

As I wrote in my weekly column in The Times last week, companies that preserve their dividend payments, and commit to continue raising them, could become the market standouts of the next few years if battered investors put more emphasis on income and less on capital gains.

-- Tom Petruno