Where are the Dividend Paying Companies?


7/21/12

Recently I was curious as to what percent of stocks pay dividends. On 7/19/12, around mid day to closing, using the Stock Screener at Google Finance, I obtained the total number of stocks which was 8,178. Of these stocks, 2,840, or 34.73% (=2,840/8,178) have a dividend yield.

I was also curious if the percent varies by price. That is, do cheaper stocks tend to pay dividends, or do more expensive stocks tend to pay dividends. To see how this percent varies by price range, I calculated this percent within $10 intervals.

For example, the interval ($0, $10), has 487 stocks with dividends divided by 2,441 total stocks = 19.95%. For the interval ($10, $20), we get 919/1,931 = 47.59%, and etc.

I stopped at the interval ($90, $100), because after this interval, the number of companies in the intervals goes below 20, and I didn't want the counts to get that small.

I also decided to calculate the median of the dividend yields within the intervals to see the relationship of the dividend yield with price. I used the median because it is less sensitive to outlying yields (either really small but legitimate, really large but legitimate, or erroneous!) than the arithmetic mean.

Interval Number Number with dividends Percent with dividends Median dividend yield rank(percent with dividends) rank(median dividend yield) sum ranks
($0,$10) 2,441 487 19.95% 4.77% 1 10 11
($10,$20) 1,931 919 47.59% 4.72% 7 9 16
($20,$30) 1,665 422 25.35% 2.91% 2 8 10
($30,$40) 676 321 47.49% 2.47% 6 7 13
($40,$50) 464 205 44.18% 2.47% 4 7 11
($50,$60) 347 154 44.38% 1.89% 5 3 8
($60,$70) 207 114 55.07% 1.82% 8 2 10
($70,$80) 142 91 64.08% 2.02% 10 5 15
($80,$90) 79 46 58.23% 1.97% 9 4 13
($90,$100) 69 26 37.68% 1.27% 3 1 4

There are some interesting things to learn from this exercise.

First, overall, there is only a weak relation between the price and the percent of those with a dividend.

Second, the ($70, $80) interval has the largest percent of dividend paying companies of all intervals considered with 64%.

Third, the ($0, $10) and ($10, $20) intervals have the largest median dividend yield of ~4.7%.

Fourth, there is a strong tendency for the median dividend yield to decrease as the price of a stock increases.

Fifth, the interval ($10, $20) seems good to pay attention to by these criteria, as it has a high percent of stocks with dividends and also a high median dividend yield. The next best interval, ($70, $80), only has a high percent of stocks with dividends but a lowish median dividend yield.

Dividends are far from the only important thing when investing, but for those interested in dividends as a starting point, the ($10, $20) interval seems a good place to look for solid companies.

Regarding investing: I do not provide personal investment advice and I am not a qualified licensed investment advisor. I am an amateur investor. All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. I will not and cannot be held liable for any actions you take as a result of anything you read here. Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions.


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