Companies Paying More Dividends

From the Cato Institute's Daily Dispatch for April 8, 2005:

"Last year, a total of 247 S&P 500 companies significantly boosted their dividends," according to the Washington Post. "Personal income from dividends climbed to $441 billion last year from $393 billion in 2003 and $388 billion in 2002, according to the Commerce Department."

"...'To be honest, what helped [the decision] was the Bush reduction in dividend taxes,' said Maria Quillard, senior director of investor relations at Xilinx [a Silicon Valley company]."

In "Show Me the Money! Dividend Payouts after the Bush Tax Cut," Cato senior fellow Stephen Moore and Club for Growth research fellow Phil Kerpen explain that the dividend tax cut decreases the tax bias against dividends to spur larger payouts to shareholders, thereby reducing the amount of discretionary cash available to executives and likely reducing the number of Enron-style corporate financial scandals.

"The large and positive response to the dividend tax cut, which is scheduled to expire at the end of 2008, suggests that Congress should make it permanent," the authors conclude.