What does the future hold for the quarterly dividends of the S&P 500 (Index: SPX) in 2023?
The answer to that question is visually presented in the following animated chart. As a bonus, we're also answering the question of how different the S&P 500's quarterly dividends for 2022 turned out with respect to what investors expected a year ago. Here's the chart:
In this chart, the data for past quarters reflects the final projection for dividends per share on the day the associated quarters' dividend futures contracts expired, which aligns with the actual amount of dividends paid during each contract's active period. The data for the projected quarters is that reported in the snapshots we took of the dividend futures data on 20 December 2021 and on 19 December 2022.
Looking at what was expected in 2022 versus what the index delivered, the animation reveals the year was more positive than had been expected by shareholders.
We also observe investors expected quarterly dividends to fall within a narrow range during 2022, ranging between a high of $16.02 per share in 2022-Q1 and a low of $15.76 per share in 2022-Q2. Investors also went into 2022 with the expectation that each quarter's dividend payout would be higher than the final dividends futures reported for 2021-Q4. Projected dividend payouts at the end of each dividend futures contract period ranged from a low of $16.53 per share in 2022-Q1 to a high of $17.00 per share in 2022-Q4. So quarterly dividends did indeed fall within a relatively narrow range, just one that was $0.75 to a little over $1.00 per share higher across the board than was projected before the year began.
Looking forward, investors at the end of 2022 are projecting a more negative future for the S&P 500's dividends during 2023. After peaking at a projected dividend payout of $17.25 per share at the expiration of 2023-Q1's dividend futures contract, investors expect dividend payouts to fall each quarter during 2023. The dividend payout for 2023-Q2 is projected to drop to $16.70 per share before falling more sharply in 2023-Q3 to $16.15 per share. 2023-Q4 would see the decline in quarterly dividend payouts decelerate to $16.05 per share.
Although we're not showing it in the animated chart, the S&P 500's projected dividends per share for 2024-Q1 is $16.25 per share. That figure is well below both the projection for 2023-Q1 and the final projection for 2022-Q1. The overall projected trend for S&P 500 dividends in 2023 is consistent with investor expectations of recessionary conditions during the year.
About the Dividend Futures Data
The dividend futures data we visualized in the animated chart is based on our records of the S&P 500's Quarterly Dividend Index Futures reported by the CME Group on 20 December 2021 and on 19 December 2022. This corresponds to the first Monday following the expiration of the respective years' fourth quarter's dividend futures contracts on the preceding Friday.
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 now "current" quarter of 2023-Q1 began on Saturday, 17 December 2022 and will end on Friday, 16 March 2023.
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.
Since we're not mixing those results with the dividend futures data, the animated chart is providing an apples-to-apples comparison for the different snapshots in time of investor expectations.