S&P: Record Number Of Firms Cut Dividend In 1Q

STEPHEN BERNARD

NEW YORK (AP) — Standard & Poor's said Tuesday that a record number of companies cut their dividend during the first quarter, while a record low announced plans to increase dividend payments.

It was the first time since S&P started tracking dividends in 1955 that dividend decreases outpaced dividend increases. The total dividend payments during the quarter declined by $77 billion, S&P said.

"Many companies were paying dividends on unrealistic earnings expectations," said Don Wordell, portfolio manager of the RidgeWorth Mid-Cap Value Equity fund. To be included in the fund Wordell manages, a company must pay a dividend.

"It's not surprising at all," that some companies would be cutting dividends, Wordell added. "The economic environment is very, very bad."

The ongoing credit crisis and recession have been the primary reasons given by many companies for cutting dividends in recent quarters. The financial services sector has been among the most active in cutting dividends, as it faces the worst credit crisis since the Great Depression.

Many banks slashed their dividends during the first quarter to preserve capital as loan losses continue to mount and profits decline. Capital One Financial Corp., JPMorgan Chase & Co., Wells Fargo & Co., PNC Financial Services Group Inc. and U.S. Bancorp were among the financial firms that cut their dividends during the first quarter.