Dividends Power the Spike in Personal Income

This morning's personal income report was a shocker. It showed the highest increase in personal income in eight years. This is great news, but if you look deeper into the report, you'll see that most of the gain in personal income was due to a humongous, 16.7% ($123 billion) increase in dividend income. That means investors who owned stocks saw their incomes surge enormously compared with people who didn't. Just by comparison, the gain in private wages was a mere 1.1%.

We know that the fourth-quarter dividend surge was largely tied to companies paying out ahead of the tax increases that will go into effect this year. OK, so in some sense it was an aberration. However, looking back over the past three years, dividend income has risen faster, percentage-wise, than any other component of personal income. Dividends have shown an average growth of 4.4% annually since 2010, while private wages have increased an average of only 1.1%. And if you're wondering about interest income, that has declined 0.3%....329 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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