Category Archives: forecasting

Future Dividend Watch at the End of 2022-Q3

What does the future hold for the dividends of the S&P 500 (Index: SPX) now that we're reaching the end of the third quarter of 2022?

We're now in the gap between when the index' dividend futures contracts for 2022-Q3 have expired and the actual end of the calendar quarter. We find the outlook for the S&P 500's quarterly dividends per share improved since we checked them near the end of 2022-Q2. What's more, we also have a first look for dividend futures data extending through the end of 2023. The following chart reveals those expectations before the start of trading on Monday, 26 September 2022:

Past and Projected Quarterly Dividends Per Share Futures for S&P 500, 2021-Q4 Through 2023-Q4, Snapshot on 26 September 2022

Here's how the dividend futures forecast has changed for each quarter for which we presented data at the end of 2022-Q2:

  • 2022-Q3: Up $0.29 per share.
  • 2022-Q4: Up $0.63 per share.
  • 2023-Q1: Up $0.73 per share.
  • 2023-Q2: Up $0.40 per share.

As interest rates rise and recessionary pressures increase, we're starting to see firms like Fedex dial back their earnings forecasts, though not yet their dividends. It's an open question of how long that state of affairs can continue.

About Dividend Futures

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarters dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the "current" quarter of 2022-Q3 began on Saturday, 18 March 2022 and will end on Friday, 16 September 2022.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor, who reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Reference

The past and projected data shown in this chart is from the CME Group's S&P 500 quarterly dividend index futures. The past data reflects the values reported by CME Group on the date the associated dividend futures contract expired, while the projected data reflects the values reported on 27 June 2022.

Summer 2022 Snapshot of the Future for S&P 500 Dividends

The outlook for future dividends per share of the S&P 500 (Index: SPX) improved since our previous mid-season snapshot at the midpoint of 2022-Q2. The following chart shows those expectations as of Thursday, 11 August 2022:

Past and Projected Quarterly Dividends Per Share Futures for S&P 500, 2021-Q3 Through 2023-Q3, Snapshot on 11 August 2022

Here's how investor expectations for the S&P 500's future dividends per share changed for each of the upcoming quarters shown in the first chart since our last snapshot three months ago:

  • 2022-Q3: Up $0.07 per share
  • 2022-Q4: Up $0.45 per share
  • 2023-Q1: Up $0.56 per share
  • 2023-Q2: Up $0.54 per share
  • 2023-Q3: Down $0.45 per share

These increases across most future quarters point to an improved outlook for the S&P 500's dividends over the past three months, with the exception of 2023-Q3, where dividend futures point to a sharp reduction. But there's an important factor to consider about this latter development.

These figures are based on dividend futures data that tends to be the most stable for the nearest term future quarter and the most volatile for the most distant future quarters. As it is, we're pushing the limits in showing the expected future for 2023-Q3, the expectations for which are the least well established at this writing. That will settle down as time passes, but right now, it's very early days for dividend futures data for this quarter!

Analyst's Notes

Six weeks ago, we started tracking what the S&P 500's quarterly dividend futures look like about a week after the end of each dividend futures contract expiration date to capture changes in expectations that investors update during these busy options trading periods. Our next update on dividend futures will be in late September 2022 and will present how they've changed from 27 June 2022 through 26 September 2022.

More About Dividend Futures

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarters dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the "current" quarter of 2022-Q3 began on Saturday, 17 June 2022 and will end on Friday, 16 September 2022.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor, who reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Reference

The past and projected data shown in this chart was taken from the CME Group's S&P 500 quarterly dividend index futures on the indicated dates. The past data reflects the values reported by CME Group on the date the associated dividend futures contract expired, while the projected data reflects the values reported on 11 August 2022.

Future Dividend Watch at the End of 2022-Q2

What does the future hold for the dividends of the S&P 500 (Index: SPX)?

We're now in the gap between when the index' dividend futures contracts for 2022-Q2 have expired and the actual end of the calendar quarter, which makes it a good time to see what investors expect for the rest of the year. The good news is the outlook for the quarterly dividends per share of the S&P 500 has continued improving since we last checked them at the midpoint of 2022-Q2. Better yet, the futures data extends through 2023-Q2 so we can peer into the first half of 2023.

The following chart reveals those expectations as of Monday, 27 June 2022:

Past and Projected Quarterly Dividends Per Share Futures for S&P 500, 2021-Q2 Through 2023-Q1, Snapshot on 27 June 2022

Here's how the dividend futures have changed since our previous snapshot:

  • 2022-Q2: Up $0.07 per share.
  • 2022-Q3: Up $0.35 per share.
  • 2022-Q4: Up $0.50 per share.

These increases indicate an improved outlook for the S&P 500's dividends has developed over the last six weeks, which you would think would have boosted stock prices during this time. If you've been watching the stock market, you know they've fallen significantly instead and if you've been following our S&P 500 chaos series, you already know why the index has behaved as it has despite its improving outlook.

But this improving outlook may be in jeopardy. With recessionary risks now rising in the U.S., expectations for future dividends will take a greater role in shaping how stock prices behave. That's why we're increasing the cadence for presenting and analyzing future dividend data, which we'll now do at roughly six week intervals. Our next update will arrive in mid-August 2022 and will present the Summer 2022 snapshot of the future for S&P 500 dividends.

About Dividend Futures

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarters dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the "current" quarter of 2022-Q3 began on Saturday, 18 March 2022 and will end on Friday, 16 September 2022.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor, who reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Reference

The past and projected data shown in this chart is from the CME Group's S&P 500 quarterly dividend index futures. The past data reflects the values reported by CME Group on the date the associated dividend futures contract expired, while the projected data reflects the values reported on 27 June 2022.

Spring 2022 Snapshot of the Future for S&P 500 Dividends

The outlook for the dividends per share of the S&P 500 (Index: SPX) brightened since we last checked on them at the midpoint of 2022-Q1. The following chart shows those expectations as of Thursday, 12 May 2022:

Past and Projected Quarterly Dividends Per Share Futures for S&P 500, 2020-Q4 Through 2022-Q4, Snapshot on 12 May 2022

Here's how future expectations for the S&P 500's dividends per share have changed for each quarter in 2022 since our last snapshot three months ago:

  • 2022-Q1: Up $0.13 per share
  • 2022-Q2: Up $0.27 per share
  • 2022-Q3: Up $0.58 per share
  • 2022-Q4: Up $0.41 per share

These increases across each quarter point to an improved outlook for the S&P 500's dividends over the past three months. If you've been following our S&P 500 chaos series though, you know why the index has behaved as it has while falling in the time since our last look at the index' dividend futures.

About Dividend Futures

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarters dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the "current" quarter of 2022-Q2 began on Saturday, 19 March 2022 and will end on Friday, 17 June 2022.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor, who reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Reference

The past and projected data shown in this chart is from the CME Group's S&P 500 quarterly dividend index futures. The past data reflects the values reported by CME Group on the date the associated dividend futures contract expired, while the projected data reflects the values reported on 12 May 2022.

Spring 2022 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

Since our last update three months ago, Standard and Poor's projections have strengthened, indicating expectations of stronger growth through 2022 and 2023. The following chart illustrates how the earnings outlook has changed with respect to previous snapshots:

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2023, Snapshot on 12 May 2022

The improved outlook for S&P 500 earnings has developed even though the Federal Reserve has begun raising interest rates and is signaling larger rate hikes to squelch excess inflation generated by the Biden-Harris administration's fiscal policies. Since those policies represent a growing headwind for the U.S. economy, it raises the question of how much more improvement would have been seen had the Fed chosen to continue holding the Federal Funds Rate at the zero bound.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 12 May 2022. Accessed 13 May 2022.