WisdomTree conducts the annual rebalance of its U.S. dividend Index family in December, with the annual screening date occurring on the last trading day of every November. The annual screening process provides a plethora of data about how dividends for the U.S. equity markets have changed over time and gives important information about the underlying market fundamentals. In the table below, we look at the Dividend Stream® for the WisdomTree Dividend Index, WisdomTree’s broadest and most inclusive dividend Index.
Dividends, a key gauge of the market’s underlying fundamentals, continue to set new highs with another year of double-digit growth.
Figure 1: WisdomTree Dividend Index (WTDI) Dividend Stream
• New Record Dividend Stream: 2014 marks the fifth consecutive year of double-digit growth for the U.S. Dividend Stream. Remarkably, the cumulative decline of more than 23% from 2007 to 2009 has been erased, and 2014 marks a new high—42% above the mark set in 2007.1
• Tech Titan Growth: Information Technology sector dividends have grown a remarkable 245% since November 30, 2007. At the prior peak, this sector constituted only 5.6% of the Dividend Stream, whereas now it constitutes more than 13.6% and is the second-largest dividend-paying sector behind Financials.
• Financials Displayed Highest Growth: The sector grew its dividends more than 21% since last year’s screening and has averaged more than 20% growth over the past five years. Even after the impressive growth since the 2009 lows, the sector’s dividends are still more than 17% below their 2007 highs, and it’s the only sector whose Dividend Stream remains below its 2007 highs.
• Consumer Discretionary Grew close to 20%: The sector grew close to 20% since last year’s screening and has grown its dividends over 100% on a cumulative basis since 2007, ranking second after Information Technology. The sector’s dividends fell more than 17% during the recession, lagging only the Financials and Materials sectors during the crisis, but Consumer Discretionary has clearly rebounded much more quickly than those two sectors. This sector is also in focus this year as one that may stand to benefit the most from recent declines in oil prices—as consumers have more discretionary income they can spend on other items.
Number of Dividend Payers Also Increases
The November 30, 2014, rebalance screening makes it clear that the Dividend Stream has grown significantly, and one reason for that growth is the increased number of companies paying dividends. The table below helps illustrate how these new dividend payers are continuing to be a very significant part of the Russell 3000 Index market cap.