By: Danielle Ulman

Members of the corporate elite, like Legg Mason Inc., could soon find themselves dethroned.

Don’t worry, they’re not getting delisted from the stock exchange or getting acquired. Let me explain. Each year, Standard & Poor’s publishes a list of companies that have increased their payouts to shareholders for at least 25 years, and the number of companies eligible to make the list is falling faster than you can say dividend.

The list, known as S&P’s “Dividend Aristocrats Index” is in danger of falling below 40 companies for the first time since 1992. There were 52 elite firms on the list last year.

Dividend stalwarts like Baltimore’s Legg,  General Electric Co., Gannett Co. and Pfizer Inc. could all disappear from the list, either for cutting payouts or keeping dividends flat in the last year. Here’s the breakdown according to Bloomberg:

Forty-six companies in the S&P 500 have announced dividend reductions totaling $42 billion in 2009, exceeding the full-year record of $40.6 billion set in 2008, according to Howard Silverblatt, senior index analyst at S&P. He forecasts that the combined payout this year will be $21.97 a share, down 23 percent from $28.39 last year. That would be the biggest decline since 1938, when it dropped 36 percent.

Keeping a record of the most generous dividend payouts has played an important role–companies on the index have returned an annualized 9.1 percent a year since 1989, compared to 6.6 percent returns for the S&P 500. Losses among the aristocrats were as high as 49 percent from the 2007 peak, compared to 57 percent on the S&P.

But now the folks over at the S&P are considering changing the rules to keep the list above 40 companies, raising the ire of some truly elite firms, like Illinois-based Abbott Laboratories, maker of insulin pumps and heart stents, which has topped its dividend offering for the last 37 years.

What do you think? Should the rules change to accommodate this awful economy or should the list of corporate royals reflect the tough times corporate giants are feeling?