For the year, S&P reported that 1,729 companies increased dividend payments, compared to 1,191 companies recording increases in 2009. Only 145 companies decreased dividend payments in 2010, versus the 804 that did so in 2009. The result was this year's net gain, a far cry from the the net decline of $42.4 billion in dividends in 2009.
"Dividend investors hit the trifecta in 2010," said Howard Silverblatt, senior index analyst at S&P Indices, in a statement Thursday. "Dividend increases were up 45%, decreases declined 82%, and best of all, the forward indicated dividend rate increased over 8%, implying a much better year for dividend income in 2011."
"The two-year extension of the lower dividend tax rate will add another $74 billion directly into the hands of investors, with a portion of it going back into the market via reinvestment programs, thereby supporting stock prices."
Silverblatt said as the economy improves in 2011, he expects more companies to increase dividends as the rate of dividend decreases declines further.