On December 2, 2004, Microsoft paid a special dividend of $3.00 per share to shareholders of record as of November 17, 2004. The total dividend payout was about $32 billion. BEA’s estimate is that about three-fourths of the total dividend payout (or $24.9 billion) was paid to persons; this amount has been converted to an annual rate (see bullet below) and recorded as personal dividend income for the fourth quarter in the month of December. Within personal income, fourth-quarter personal dividend income was boosted by $99.4 billion (at an annual rate), and December personal dividend income was boosted by $298.2 billion (at an annual rate, see bullet below). Additional payouts distributed to U.S. businesses, to state and local governments, and to foreign residents will affect the estimates of corporate profits, national income, and government current receipts that will be released on March 30. Because BEA’s estimates of corporate profits and of the balance on current account are partly based on confidential survey data, BEA will not provide estimates of the effects of the special dividend on these components.
It is important to understand that BEA’s quarterly and monthly estimates are presented at annual rates. Therefore, the quarterly estimates of the dividend payout are multiplied by a factor of 4, and the monthly estimates are multiplied by a factor of 12. For example, BEA concluded that $24.85 billion of the $32 billion payout went to persons, which boosted fourth-quarter personal income by 4 × $24.85 billion = $99.4 billion, and boosted December’s personal income by 12 × $24.85 billion = $298.2 billion. (For most series, BEA publishes estimates of levels at annual rates so that periods of different lengths -- for example, months, quarters, and years -- may be easily compared. As a result, one-time events, such as the Microsoft dividend payout can have a large effect on the quarterly and monthly estimates.)