Dividend cuts and S&P500 valuation.

The long-term statistics show that the yield of U.S. stocks from 1900 is, exclusive of the impact of inflation, on average at 6%. If the calculation excludes dividend yield falls on the full 70% to just 1.7%, below the long-term average of 2,1-percentage yield on U.S. government bonds. Investors expect long-term growth of dividends by an average of 1.2% per year. In the first half of the 20th century represented a share of dividend yield on the total stock returns, which accounted for 5.3%, almost 100%. Between 1980 - 2000, the proportion of dividends to total income decreased to approximately 25%.

In the 4Q of last year announced 288 companies from the base index of the S & P 500 partial or complete reduction of dividends, the biggest since establishment of index on 1955. The involvement of dividends to the whole equation shows that mentioned index is still about 40% overvalued. Fair value equivalent to the current situation should be at about 526 points.

Only 25 firms from the base of the index last year "saved" at around 17 mld.USD dividends, which exceeds the overall reduction in dividends in the years 2003-2007, when the index has produced an assessment of 83%. On the basis of one share of the company based S & P 500 this year may reduce the dividend by 13%, which would correspond to the largest decrease from 1942.

In a similar perspective, it appears that the titles that have maintained power for the payment of dividends are now very cheap and very attractive. These include mainly companies McDonald's, Procter & Gamble and others.