– Ford Motor company, which initiated an approximately $750 million indicated cash dividend, its first since 9/15/2006, as its prospects continued to improve after the 2008–09 crisis. This led to a weight of .23% in the WisdomTree Dividend Index as of November 30, 2012.
Moreover, some of the largest dividend payers grew their already substantial dividends by very large amounts over the past year (11/30/11–11/30/12, “the period”):
– Exxon, which grew its regular indicated dividend stream from $9.0 billion to $10.4 billion over the period—an increase of approximately $1.4 billion, leading to a weight of 3.16% in the WisdomTree Dividend Index as of November 30, 2012, the largest individual weight in the Index.
– Cisco, which raised its regular indicated dividend approximately 133%, or approximately $1.68 billion, over the period, leading to a weight of .90% in the WisdomTree Dividend Index as of November 30, 2012.
– Microsoft. The firm that paid one of the largest special dividends ever by a U.S. company—approximately $30 billion in December of 20047—increased its regular indicated cash dividend by over $1 billion over the period and now pays close to $8.0 billion annually, leading to a weight of 2.35% in the WisdomTree Dividend Index as of November 30, 2012.
In conclusion, I do not believe these special dividends deserve any special attention. At WisdomTree, we employ an inclusive approach to our Dividend Index construction: capturing all regular dividend payers and assigning the most weight to the companies who pay the most in regular indicated cash dividends each year. For more insight on how regular dividends have changed this year, see my previous blog on our annual Dividend Index rebalance, which occurs this month.
The WisdomTree Total Dividend Fund (NYSEArca: DTD) is designed to track the Wisdomtree Dividend Index.
Jeremy Schwartz is director of research at WisdomTree Investments (NasdaqGM: WETF). This post was republished with permission from the WisdomTree blog.
1Based on the constituents of the WisdomTree Dividend Index. Source: Bloomberg.
2Source: Bloomberg, as of 11/30/2012 Index Screening.
3Source: Bloomberg, as of 11/30/2012 Index Screening.
4Refers to the prior peak of the dividend stream of the WisdomTree Dividend Index, as of 11/30/2007.
5Based on the constituents of the WisdomTree Dividend Index.
6There were 124 additions to the WisdomTree Dividend Index as a result of the 11/30/2012 Index screening.
7La Monica, Paul R., “Microsoft’s $75 Billion Cash Reward.” Money.CNN.com, July 21, 2004.
