Retirees Are Battered By $12 Billion Loss of Dividend Payouts

2/10/2009

posted by N. Sioris

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The most severe decline in dividend income is expected to take $12 Billion out the pockets of shareholders in the coming months. Dividends are being cut at the fastest pace in 50 years. Many of the dividend cuts are coming from U.S. companies whose investors have been relying on dividends to provide income during this recession.

Retirees that have all ready been battered by steep market declines are now facing the loss of cash flow that many rely heavily upon to supplement their annual cash flow.

All ready this year, seven companies in the Standard & Poor's 500 Index have decreased their dividends. If the trend continues, this will be the worst year for dividend cuts since 1958, when annual payments fell 8.4 percent, according to S&P.

Of the seven companies that said they will cut dividends in 2009, six are in the financial industry and all reduced their payouts by at least 50 percent. The largest decrease has come from Bank of America, which said it will slash its dividend from $1.28 a share annually down to 4 cents a share. That alone, wiped out $6.2 billion in annual cash payments to investors.


Could It Be Worse Than The 50 Year Record?

Howard Silverblatt, senior index analyst at S&P, is quoted as saying; "It is easy to say this is going to be the worst in 50 years, but the bigger question is whether it is going to be much worse than that."

One solution for retirees that own a home with little or no mortgage balance is a reverse mortgage. A reverse mortgage allows seniors age 62 and older to tap home equity in order to supplement retirement income. No mortgage repayment is required as long as the home is occupied by the senior. Their are no income or credit qualifications, and the money is non-taxable.

Request A Free Reverse Mortgage Quote Today!