More shareholders getting stiffed on dividends

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Here’s one measure of Corporate America’s fear level about the economy: The number of U.S. companies that raised dividend payments to shareholders plunged 24% in the first quarter from a year earlier.

And the number of companies cutting or omitting dividend payments surged.

For investors, this is the double-whammy: Your stock price is down and you have less chance of getting some extra cash paid to you via a dividend hike.

Standard & Poor’s, which tracks dividend trends at 7,000 U.S. companies, says it counted 475 dividend increases in the first quarter, the lowest for any January-March period since 2003 (when the Iraq war began) and down from 621 in the first quarter of 2007.

Howard Silverblatt, S&P’s chief dividend analyst in New York, says many companies may well have enough cash on the balance sheet to boost their dividends, but managements turned cautious nonetheless in the quarter amid the “uncertainty and volatility of the both the market and the economy.”

Or, he notes, companies may say they’re choosing to return cash to shareholders by buying back stock in the market rather than by paying a bigger dividend.

But whereas a stock buyback might help support your stock price, a dividend increase is actual cash in your pocket.

Silverblatt says he’s more concerned about the jump in the number of companies that slashed dividends in the first quarter or omitted them entirely. A total of 38 companies cut dividends in the three months, up nearly 200% from the 13 that did so in the first quarter of 2007.

And 45 companies last quarter stopped paying a dividend altogether, up from just six in the year-earlier quarter.

Not surprisingly, prominent on the list of dividend cutters or omitters in the first quarter were financial companies — including bond insurer Ambac Financial Group, Citigroup and Sovereign Bancorp.

One place to look for companies still in the mood to raise dividends: the energy sector. Oilfield services giant Schlumberger raised its annual dividend rate 20% in the quarter, to 84 cents a share. ConocoPhillips boosted its annual rate 15%, to $1.88 a share.