WisdomTree conducts an annual rebalance of its U.S. Dividend Index family every December, with the annual screening date occurring on the last trading day of every November. This rebalance provides a plethora of data about how dividends for the U.S. equity markets have changed over time. Below are key highlights, but for full details on this year’s rebalance, you can read more here.
Key Features:
• New Record Dividend Stream: 2012 marks the third consecutive year of double-digit growth for the dividend stream of the WisdomTree Dividend Index (“U.S. dividend stream”). Remarkably, the cumulative decline of more than 23% from November 30, 2007, to November 30, 2009, has been erased, and November 30, 2012, marks the setting of a new record high that is approximately 14% greater than the mark set November 30, 2007.
• Ex-Financials vs. Financials: As of November 30, 2012, the U.S. dividend stream for the nine sectors excluding Financials more than 42% higher than the level seen on November 30, 2007. Financials, on the other hand, are still nearly 43% below their November 30, 2007, levels.
• Tech Titan Growth: Information Technology sector dividends have grown a remarkable 172.18% since November 30, 2007. At the prior peak, this sector comprised only about 5.6% of the dividend stream, whereas now it comprises more than 13% and is the third-largest dividend-paying sector behind Consumer Staples and Financials.
• More Diversified Dividend Stream: On November 30, 2007, approximately one-third of the U.S. dividend stream came from the Financials sector. As of the new November 30, 2012, peak, the Financials sector comprises only about 16.7% of the U.S. dividend stream, and no single sector comprises more than 20%.
• Dividends Despite Tax Uncertainty: Even though the potential tax policy and specific tax rate on dividends remain uncertain for 2013, there was widespread dividend growth across the market. For instance, of the 20 largest dividend payers in the United States, 19 raised their indicated dividends per share over the prior 12 months, and one, Apple, Inc. (AAPL), initiated a dividend1.
Largest Dividend Initiators (Additions) to the WisdomTree Dividend Index (WTDI)
The November 30, 2012, rebalance screening makes it clear that the U.S. dividend stream has grown significantly, and one reason for that growth is the increased number of companies paying dividends:
• Dividend Payer Coverage of Market Increasing: As of November 30, 2012, the S&P 500 Index had over 88%2 of its constituent weights in dividend payers, signifying that dividend payers constitute a very large component of this widely referenced index of U.S equity performance.
• There were 124 additions to the U.S. dividend stream this year, and they contributed an increase of about $17.3 billion. Over 50% of this increase comes from Apple, Inc. (AAPL)—the third-largest contributor to the dividend stream behind only Exxon Mobil (XOM) and AT&T (T) at the November 30, 2012, screening date.
Valuation Impact