Category Archives: recession

Dividends by the Numbers in January 2023

2023 got off to a rocky start for dividend paying stocks in the U.S. stock market. The number of firms announcing dividend reductions jumped back above the threshold indicating recessionary conditions are present in the U.S. economy. Meanwhile, the number of dividend increases announced during January 2023 presents a more mixed picture, up month over month, but down year over year.

These changes are visualized in the following chart.

Number of Public U.S. Firms Increasing or Decreasing Their Dividends Each Month, January 2004 through January 2023

With the new year, we're revamping how we present the U.S. stock market's monthly dividend metadata. The following table presents the data for the just completed month of January 2023, the preceding month of December 2022, and the year ago month of January 2022. We've also presented the Month-over-Month (MoM) and Year-over-Year (YoY) changes for January 2023's dividend metadata:

Dividend Changes in January 2023
  Latest Previous Month Previous Year
   Jan-2023  Dec-2022  MoM  Jan-2022  YoY
Total Declarations 3,127 5,528 2,401 ↓ 2,224 903 ↑
Favorable 221 281 60 ↓ 264 43 ↓
- Increases 168 144 24 ↑ 198 30 ↓
- Special/Extra 48 135 87 ↓ 59 11 ↓
- Resumed 5 2 3 ↑ 7 2 ↓
Unfavorable 65 31 34 ↑ 17 48 ↑
- Decreases 65 31 34 ↑ 17 48 ↑
- Omitted/Passed 0 0 0 ↔ 0 0 ↔

Our sampling of dividend decreases only captured 13 of the 65 reported divieend reductions. They are predominantly concentrated in the U.S. oil and gas sector among firms that pay variable dividends to their shareholding owners. These firms have made frequent appearances in recent months, coinciding with the ~35% decline in the price of crude oil from early June through December 2022. Dividend reductions most often represent a mildly lagging indicator for declining business conditions, so their appearance in January 2023 is not unexpected.

Here's the list for our sampling, where we also find industrial representation from the real estate and financial services sectors of the economy.

Going back to the dividend metadata, we're surprised we're not seeing more firms being recorded as omitting (or suspending) their dividend payments to shareholders. We suspect Standard and Poor is including them with the number of dividend decreases they report. That makes sense since both dividend cuts and omissions count as unfavorable changes, which we're now tracking in our monthly dividend metadata summary.


Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 February 2023.

U.S. Imports from China Collapse in November 2022

U.S. imports of goods produced in China collapsed further in November 2022, continuing the plunge that began in September.

The following chart shows the year-over-year growth rate of the value of goods imported from China to the U.S. has collapsed into negative territory, confirming U.S. imports are shrinking.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods, January 1986 - November 2022

We dug into the Census Bureau's detailed data on goods traded between the U.S. and China during November 2022. We found three categories of goods account for the bulk of the year over year reduction in goods imported from China. Here is the list:

  • Electric Machinery (primarily Smartphones, Monitors, and Electrical Heating Devices)
  • Automatic Data Processing Machines
  • Toys (not including Video Game Consoles)

The growth rate chart also shows U.S. exports to China held their single-digit year-over-year growth rate, but even that is misleading. The months of October through December represent the peak season for U.S. exports to China, which is dominated by soybeans. Updating the animated chart we featured last month, we find that while the value of 2022's exports of soybeans is setting new records, in real terms, the volume of soybeans being exported is well below the levels set in 2016, 2017, and 2020.

Animation: Cumulative Value of U.S. Soybean Exports to China by Month, 2016-2022 YTD (thru November)

Overall, the continuing collapse of U.S. imports from China has pulled the combined value of goods traded between the U.S. and China below a counterfactual trajectory based on the recovery of trade between the countries after 2008-09 Great Recession. The next chart shows the post-pandemic trade recovery is once again underperforming:

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - November 2022

As a general rule, growth trends for imports provide an indication of the relative health of the economy that is importing the goods. In this case, we think it's more an indication that the COVID lockdowns China imposed in October and November severely disrupted its production and export of the goods that saw the biggest year-over-year declines.

China's government was forced to reverse its lockdown policies in December 2022, with most of its restrictions lifted by early January 2023. That timing means we should anticipate at least one more month of negatively impacted imports from China before its government's policy reversal begins to be reflected in the trade data.

On the U.S. side of the trade ledger, we only have December 2022's data to be reported before we can close the books on 2022's soybean export season. After that data is reported in early February 2023, we anticipate U.S. exports to China will plunge since they will no longer be boosted by the inflated value of soybeans. These changes mean that trade between the U.S. and China will transition into a stronger headwind against the U.S. economic growth in 2023.


U.S. Census Bureau. Trade in Goods with China. Last updated: 5 January 2023.

U.S. Department of Agriculture. Soybeans - Price Received, Measured in $/bushel. [Online Database]. Accessed 8 January 2023.

U.S. Trade Online. [Online Database]. Accessed: 5 January 2023.

Fall 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.

The S&P 500's earnings recession has deepened since since our last update three months ago. Standard and Poor continues to project the new earnins recession will last through at least December 2022. The following chart illustrates how the latest 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 9 November 2022

Depending on who you talk to, an earnings recession has one of two definitions. An earnings recession exists if either earnings decline over at least two consecutive quarters or if there is a year-over-year decline over at least two quarters. The chart identifies the periods in which the quarter-on-quarter decline in earnings definition for an earnings recession is confirmed for both the Pandemic Earnings Recession (December 2020-December 2021) and the new earnings recession (March 2022-December 2022). The regions of the chart we've shaded in light red indicate the periods where year-over-year declines in earnings per share to qualify as an earnings recession would be satisfied.

Our next snapshot of the index' expected future earnings will be in three months. Whether the S&P 500's current earnings recession extends into 2023 will be determined during that time.


Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 9 November 2022. Accessed 11 November 2022.

Dividends by the Numbers in October 2022 Send Recessionary Signal

The number of U.S. firms either increasing or decreasing their dividends in any given month can tell us about the developing state of the U.S. economy. In October 2022, the number of announced dividend reductions sent a clear signal the U.S. economy is experiencing recessionary conditions.

Here's the latest update to our chart tracking monthly increases and decreases for dividends as reported by Standard and Poor for each month from January 2004 through October 2022.

Number of Public U.S. Firms Increasing or Decreasing Their Dividends Each Month, January 2004 through October 2022

The more serious signal is the reported spike in the number of U.S. firms that have announced dividend cuts. In October 2022, that number leapt above the threshold of 50 we've identified on the chart, which coincides with a significant level of distress for businesses within the U.S. economy. The number of dividend increases is also a tell, mainly because it is lower year-over-year, continuing 2022's negative trend for this measure.

Here's our summary of October 2022's dividend metadata:

  • There were 3,267 U.S. firms declaring dividends in October 2022. That's a decrease of 815 from September 2022, and a decrease of 1,880 from the number of declarations recorded a year earlier in October 2021.
  • A total of 59 U.S. firms declared they would pay a special (or extra) dividend in October 2022, up from September 2022's seasonal low of 33 and the same as did back in October 2021.
  • 149 U.S. firms announced they would increase dividends during October 2022, an increase of 475 over September 2022's seasonal low, but a year-over-year decrease of 13 from October 2021's level.
  • Standard and Poor reports 62 companies cut their dividends in October 2022. That's 49 more than did in September 2022 and 43 more than did a year earlier in October 2021.
  • There were zero U.S. firms suspending (or omitting) their dividends in October 2022, continuing the trend established since June 2021. That trend now stands out as unusual with respect to the surge in announced dividend cuts, because the combination indicates the firms cutting dividends are not anticipating a mild level of distress they might simply weather and simply resume paying dividends at their set levels later.

We found the following fifteen announced dividend reductions in our sampling of October 2022's dividend declarations. This month's list includes six firms from the Oil and Gas sector, four Financial Services firms, three Real Estate Investment Trusts, and one firm each from the Transportation and Materials sectors of the U.S. economy. Meanwhile, over half the listed firms pay variable dividends, which are listed here because they are very sensitive to changing business conditions. If you're someone who becomes irrationally upset when fixed and variable dividend-paying companies are listed together as dividend cutters after they've reduced their dividends, get ready to white-knuckle your armrests.

Dividend cuts are a near-real time indicator of potential distress for the businesses that declare them, particularly when their numbers begin accumulating above the market's typical noise level. With the exception of monthly dividend payers, the timing of dividend cuts follow about a quarter behind the changes in business conditions that compel them. Which is to say investors need to stay tuned, because the number of dividends cuts is catching up to negative conditions that have already developed within the economy.


Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 November 2022.

Standard and Poor. S&P Indicated Rate Change. [Excel Spreadsheet]. Accessed 1 November 2022.

The S&P 500 vs Dividend Stock Funds

Morningstar's Amy Arnott wrote a column exploring whether dividend stocks provide shelter from a recession. It's a good article, and after reading it, we had a question. How would the S&P 500 (Index: SPX) compare with the three categories of dividend funds she discussed?

Those dividend stock fund categories include growth, growth and income, and income. In the following table, she gives some useful metrics for comparing how each type has performed during the past five years.

Morningstar: Risk and Returns for Three Dividend Strategies, 31 July 2022

The table presents the trailing twelve month dividend yield for each type of dividend stock fund, and also the five-year performance of each category for their Annualized Return, Standard Deviation (a measure of volatility), Sharpe Ratio (a risk-adjusted measure of investment return), and their Maximum Drawdown (the largest downward trend experienced from peak to trough).

We tracked down the same measures for the S&P 500. In the following chart, we've visually compared the index's dividend yield and 5-year annualized return with that of each of the dividend fund categories. We've also indicated the Sharpe Ratio for each in the column headings.

S&P 500 vs Dividend Growth, Growth + Income, and Income Fund Performance by Fund Type for Five Years Ending 31 July 2022

Although they have the lowest dividend yields, the S&P 500 and Dividend Growth fund categories provided the best total returns. That's also true after considering their Sharpe Ratio values, for which Arnott had indicated for the Dividend Growth category "posted the best combination of risk and return", beating the other two types of dividend funds. Speaking of which, Arnott recognizes that the dividend stock funds might have recorded better returns if not for having higher fees. She found that low-cost funds outperformed high-cost funds for overall returns.

The next chart compares the S&P 500's and the three dividend stock fund categories' standard deviation (volatility) and their worst recorded downward trend over the past five years.

S&P 500 vs Dividend Growth, Growth + Income, and Income Fund Volatility by Fund Type for Five Years Ending 31 July 2022

The standard deviation data for the S&P 500, Dividend Growth, and Dividend Income funds were all similar, with the Dividend Growth and Income fund recording the lowest volatility. Meanwhile, the S&P 500 clearly outperformed the other fund types by recording the smallest drawdown during the past five years, with Dividend Growth funds ranking second lowest. Dividend Income funds recorded the most adverse drawdown in the five year period ending on 31 July 2022.

Altogether, the data indicates the S&P 500 had the best overall performance, followed by Dividend Growth funds, then Dividend Growth and Income funds, and finally, Dividend Income funds.


Arnott, Amy. Do Dividend Stocks Provide Shelter From Recession? Morningstar. [Online Article]. 8 August 2022.

Morningstar. S&P 500 PR Risk Data. [Online Application]. Accessed 14 August 2022.

PortfoliosLab. S&P 500 Portfolio Trailing Twelve Month Dividend Yield [Online Application]. Accessed 14 August 2022.