Frequently Asked Questions
Guidelines for Citing BEA Information | ID: 318 | Created: Aug-14-2006
Dividends as a share of after tax profits from current production in the national income and product accounts (NIPAs) ranged from 41 to 83 percent in 2003–2015. Private-sector reports (for example, the S&P 500) of dividends as a share of operating profits ranged from 27 to 57 percent for the same period.
There are differences in coverage and definitions between the NIPA estimates and the private-sector estimates. One of the most important factors accounting for the difference in the estimates of dividend-to-profits ratios is the inclusion of S corporations in the NIPA estimates; they are excluded from many of the private-sector estimates. S corporations are legal entities that pay no Federal corporate profits taxes; instead, all of their earnings are treated as taxable income of shareholders, regardless of whether the income is distributed as dividends or retained by the corporation. As a result, most income is paid out as dividends. Since 1998, S corporation dividends generally represented 82 to 92 percent of the profits of S corporations that reported gains. When losses are included, dividends accounted for more than 100 percent of net S corporation profits for most years during that period.
As shown in the table below, the IRS estimate of the share of total dividends accounted for by S corporations increased from about 20 percent in 1992 to 44.5% in 2001 then dropped to 37.8% in 2004; the share peaked at 47.2% in 2011. The S corporations' share of IRS reported dividends was 42.2% in 2014, the latest year for which the data are available. Thus, the inclusion of S corporations in the NIPA measures, especially given the high payout of dividends among S corporations and their growing share of total dividends, have raised NIPA measures of dividends-to-profit ratios compared with the ratios reported by the private-sector reports.
A table showing cash dividends of S corps and other corporations is available. | XLS: Table (XLS)
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