Category Archives: dividends

Dividends by the Numbers in December 2022 and 2022-Q4

Dividend paying stocks in the U.S. stock market closed December 2022 with a mixed showing. Starting with the good news, the number of dividend reductions fell month-over-month. But the number of dividend increases also fell from November 2022's level, which darkens the picture. The following chart visualizes the number of U.S. firms either increasing or decreasing their dividends in each month from January 2004 through December 2022.

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

The mixed nature of the numbers are also evident in December 2022's dividend metadata. Here's the summary of those figures:

  • 5,528 firms declared dividends in December 2022, an increase of 1,924 over November 2022's total. That figure is also an increase of 197 over the 5,331 recorded in December 2021.
  • Some 135 U.S. firms announced they would pay a special (or extra) dividend to their shareholders in December 2022, an increase of 29 over the number recorded in November 2022, but a decrease of 33 from the 168 recorded in December 2021.
  • 144 U.S. firms announced dividend rises in December 2022, falling by 33 from the 177 recorded in November 2022 and just one less than the number recorded back in December 2021.
  • A total of 31 publicly traded companies reduced their dividends in December 2022, an decline of 10 from the number recorded in November 2022, but an year-over-year increase of 12 over December 2021's figure.
  • Zero U.S. firms omitted paying their dividends in December 2021, continuing the unusually long trend established since June 2021.

A darker picture emerges when we tally up the quarterly data for dividend changes in 2022-Q4. Dividend reductions in particular are unambiguously worse than those recorded in the preceding quarter of 2022-Q3 and in a year-over-year comparison with 2021-Q4. The next chart visually summarizes the quarterly data for dividend increases and decreases over the past five quarters.

Number of Public U.S. Firms Increasing or Decreasing Their Dividends by Quarter, 2020-Q4 through 2021-Q4

Going back to the monthly data, we captured 16 of December 2022's 31 dividend reductions. Here's the list, which includes eight firms in the real estate sector, which has been under pressure from the Federal Reserve's 2022 campaign to hike interest rates to fight President Biden's inflation. It also includes five firms that pay variable dividends, all in the oil and gas sector, which has been under pressure since oil prices peaked in June 2022 before beginning a 35% decline. Two firms in the consumer-oriented goods or services sector and one from the technology sector round out December 2022's dividend reduction sample.

This month's sampling demonstrates, once again, why listing variable paying firms with reduced dividends along with firms that cut their dividends in tallying up the monthly numbers is both appropriate and useful. That's because all of these firms are dealing with deteriorating business conditions within their respective industries. They're not just dealing with the typical or seasonal noise that is otherwise always present in the market. Those investors who write off the dividend reductions announced by variable dividend payers as not worthy of mention because the companies haven't altered their formula for determing how much to pay out in dividends are missing the real picture.

Taking a step back to look at the bigger picture for our sampling of dividend reductions over the past quarter, we find 2022-Q4 is the most negative for dividend paying firms since the aftermath of the Coronavirus Recession. Moreover, what stands out about the dividend reductions reported during 2022-Q4 is the breadth of affected industries. Our third chart illustrates that breadth of impact using our sampling from throughout the quarter:

Sampled Dividend Decreases in U.S. by Industrial Sector, 2022-Q4

In the end, we find December 2022 was the best month in the worst quarter since 2020-Q2. That's not saying much in the current market environment with 2023's recession expectations running rampant.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 3 January 2023.

The Future for the S&P 500’s Dividends in 2023

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:

Animation: Past and Projected S&P 500 Quarterly Dividends per Share Futures, 2021-Q4 through 2023-Q4, Snapshots on 20 December 2021 and 19 December 2022

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.

Dividends by the Numbers During the Great Depression

Dividends by the Numbers is one of our most popular series. Each month, we discuss the U.S. stock market's metadata for the number of dividends that were declared, visualizing how many U.S. publicly-traded companies either increased or decreased their dividends, and report how many firms omitted paying dividends or resumed paying them and also the number of companies that announced they would pay an extra, or "special", dividend to their shareholding owners.

In doing that, we're following in the footsteps of legendary financial writer Bertie Forbes, who pioneered this kind of reporting in 1922. B.C. Forbes, a Scottish immigrant who founded the business and finance magazine that still bears his name today after becoming a U.S. citizen in 1917, was one of the earliest market observers to realize this data was telling an incredible story as the roaring twenties boom was getting underway. Within a year, he was incorporating the dividend metadata from several hundred stocks he regularly followed into his syndicated columns.

The 1920s was also when the Standard Statistics Company, the "Standard" in today's Standard and Poor, launched its market analytics business. The firm had its big breakthrough on 2 January 1929, when the Associated Press adopted its 90-stock composite index for its reporting on the U.S. stock market. The market capitalization weighted index is the direct precursor to the S&P 500, and the AP's decision played a large role in establishing the new index as widely reported market metric.

But that wasn't all the information that Standard Statistics compiled for the AP. They also compiled monthly dividend metadata as B.C. Forbes was doing, but for the entire U.S. stock market, which in that era consisted of more than 3,100 individual stocks.

1929 is a remarkable year because it also marks the beginning of the Great Depression and the stock market crashes that signaled it was getting underway. The U.S. stock market's dividend metadata soon proved to be a vital indicator, particularly the number of dividend reductions that were announced each month. In the worst years of the depression, the reports changed to be presented on a weekly basis because the number of cuts had become so large.

We've reconstructed the data series for the number of dividend increases and reductions being announced each month from that era's contemporary news reporting. If you want to know what an economic disaster really looks like, here's the picture:

Number of Public U.S. Firms Increasing (Blue) or Decreasing (Red) Their Dividends Each Month, January 1929 through January 1936

We selected this period to show the full cycle of dividend rises and reductions as started from their pre-Depression levels, to exploding in economic crisis, to once again resuming their pre-Depression levels.

We've also shown the period the National Bureau of Economic Research indicates the U.S. economy cycle went into and stayed in contraction after having peaked in August 1929. Note that the number of dividend cuts begins to rise above its pre-Depression levels some three-to-six months after the Depression started. After a year, there's a regular spike every three months as U.S. companies reported their earnings and as increasingly become the case, their dividend cuts. Those cuts kept getting worst until June 1932, when the number of dividend cuts peaked. That peak coincides with the market bottom for Standard Statistics' 90-stock composite index during the Great Depression.

Afterward, the number of dividend cuts reported each month began to fall as economic conditions improved. After the NBER-recession ended in March 1933, it took another three-to-six months for the number of dividend cuts to drop back to what we'll call "near pre-Depression levels". At the same time the number of dividend increases began to rise off the floor, also signaling the improvement taking place in the economy. But then it took another four years before dividend increases and decreases consistently tracked their pre-Depression levels.

After January 1936, reporting on dividend metadata became more sparse and eventually disappeared from regular news coverage. In the era since, it hasn't been a regular feature, even though its still reported each month by Standard Statistics successor firm, Standard and Poor. Only now, that metadata is included as part of a wider ranging report featuring much more market performance data, so it doesn't stand out the way it did when it was widely recognized as a vital market measure during the most critical period the U.S. economy has experienced.

At least, until several years ago, when we unknowingly followed in Bertie Forbes footsteps and brought it back to life as the main feature of a regular column. We only learned about Forbes' role in originating this kind of analysis because we went looking for historic metadata for dividends during the Great Depression and kept running into his syndicated columns as we reconstructed the data!

The S&P 500 Dividend Engine

Did you ever wonder how much money you could earn in the form of cash dividends if you were invested in the S&P 500 (Index: SPX)?

Josh Scandlen of Heritage Wealth Planning did, discovering he could use one of our signature tools, The S&P 500 at Your Fingertips, to extract the information he was after. He put together the following 14 minute YouTube video to explain both how dividends work for you as an investor and how to get cash dividend payout information from our tool:

After watching the video, we had two thoughts:

  1. That's an incredibly useful idea for investors, particularly those looking for dividend income after they retire.
  2. There's got to be a much easier way to get that dividend payout data.

Long time readers will already see where this discussion is heading! We've built a new tool, one that ties directly into the quarterly dividend data that Standard & Poor reports in spreadsheet form for its heralded S&P 500 index. In it, we put you in the shoes of someone who has either just bought into the index or has just flipped the switch to begin collecting cash dividends from it during the month ending a historic calendar quarter.

Based on the value of the investment at that point of time, it estimates the equivalent number of shares of the S&P 500 you own. It then calculates how much dividend income you would have collected at a later point of time, assuming you never sell any of the shares you own. It will also tell you how much your investment in the S&P 500 is worth at that later point of time you selected.

But that's not all! The tool also extracts how much you would have earned in dividends during the first calendar year of your investment, during the final calendar year, and also during any calendar year that might interest you in between. It will also identify the highest and lowest amount of dividends earned in any calendar year throughout your full period of interest.

If you're ready, here's the tool. If you're reading this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

S&P 500 Investment Value and Dividend Payout Period
Input Data Investment Value Year Quarter
Enter Starting Investment Value and Select Starting Year and Quarter
Select Ending Year and Quarter
Optional Input Data Year
Select Year Between Starting and Ending Years to See Annual Dividend Payout

Investment and Dividend Payouts
Results Investment Value Dividends Paid Out
At the End of the Selected Period
Dividend Payout Milestones
Milestone Year Value
Dividends Paid Out By End of First Calendar Year
Dividends Paid Out Through Selected Quarter in Final Calendar Year
Dividends Paid Out During Optional Selected Year
Highest and Lowest Annual Dividend Payouts
Lowest Annual Dividend Payout
Highest Annual Dividend Payout

We've set the default data in the tool up to reflect the example Josh Scandlen worked in his video, but we've made all the quarterly dividend data we have for the S&:P 500 and its predecessor indices and component stocks going back to 1871. If you want to see that historic data, you can access it either through our The S&P 500 at Your Fingertips tool, which is updated monthly, or at our Quarterly Data for the S&P 500, Since 1871 resource, which we update annually.

Speaking of updates, we plan to update this tool in January 2023 after 2022's dividend data is available, then quarterly afterward.

Using the tool, we recommend selecting different periods and paying attention to when the lowest annual dividend payout data differs from the first year's data. The idea here is that you would want your investment to handle a worst case scenario when the market experiences a major downturn. While this will depend on what periods you might cover, we found that 1896 and 1933 represent major low points for a multi-decade investment holding period.

That said, we're celebrating our anniversary today, and what better way to do it than building on the capabilities of a tool we featured in one of our earlier anniversaries!

Celebrating Political Calculations' Anniversary

Our anniversary posts typically represent the biggest ideas and celebration of the original work we develop here each year. Here are our landmark posts from previous years:

  • A Year's Worth of Tools (2005) - we celebrated our first anniversary by listing all the tools we created in our first year. There were just 48 back then. Today, there are over 300....
  • The S&P 500 At Your Fingertips (2006) - the most popular tool we've ever created, allowing users to calculate the rate of return for investments in the S&P 500, both with and without the effects of inflation, and with and without the reinvestment of dividends, between any two months since January 1871.
  • The Sun, In the Center (2007) - we identify the primary driver of stock prices and describe a whole new way to visualize where they're going (especially in periods of order!)
  • Acceleration, Amplification and Shifting Time (2008) - we apply elements of chaos theory to describe and predict how stock prices will change, even in periods of disorder.
  • The Trigger Point for Taxes (2009) - we work out both when, and by how much, U.S. politicians are likely to change the top U.S. income tax rate. Sadly, events in recent years have proven us right.
  • The Zero Deficit Line (2010) - a whole new way to find out how much federal government spending Americans can really afford and how much Americans cannot really afford!
  • Can Increasing the Minimum Wage Boost GDP? (2011) - using data for teens and young adults spanning 1994 and 2010, not only do we demonstrate that increasing the minimum wage fails to increase GDP, we demonstrate that it reduces employment and increases income inequality as well!
  • The Discovery of the Unseen (2012) - we go where so-called experts on income inequality fear to tread and reveal that U.S. household income inequality has increased over time mostly because more Americans live alone!

We marked our 2013 anniversary in three parts, since we were telling a story too big to be told in a single blog post! Here they are:

  • The Major Trends in U.S. Income Inequality Since 1947 (2013, Part 1) - we revisit the U.S. Census Bureau's income inequality data for American individuals, families and households to see what it really tells us.
  • The Widows Peak (2013, Part 2) - we identify when the dramatic increase in the number of Americans living alone really occurred and identify which Americans found themselves in that situation.
  • The Men Who Weren't There (2013, Part 3) - our final anniversary post installment explores the lasting impact of the men who died in the service of their country in World War 2 and the hole in society that they left behind, which was felt decades later as the dramatic increase in income inequality for U.S. families and households.

Resuming our list of anniversary posts....

Dividends by the Numbers in November 2022

The U.S. stock market continued to show developing weakness during November 2022. Putting the bad news first, the number of companies increasing their dividends continued trending downward. The good news is that the number of firms cutting their dividends was down from October 2022, when they had sent a recessionary signal, but this figure remains elevated over the level recorded since the end of the coronavirus recession.

The following chart shows where November 2022's data for both dividend increases and decreases fits with the monthly data reported since January 2004.

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

Here is November 2022's metadata describing the number of dividend declarations, special dividends, increases, decreases and omissions for the month:

  • 3,604 U.S. firms declared dividends in November 2022, an increase of 334 from the 3,267 recorded in October 2022. That 1,537 less than the 5,141 recorded in November 2021.
  • There were 106 firms that announced they would pay a special (or extra) dividend to their shareholders in November 2022, an increase of 47 over the number recorded in October 2022 but three less than the number recorded in November 2021.
  • 177 U.S. firms announced dividend rises in November 2022, an increase of 28 over the number recorded in October 2022, but a decrease of 13 from November 2021's total.
  • S&P counted 41 dividend cuts in November 2022, a decline of 21 from the 62 recorded in October 2022. Year-over-year, November 2022's count of dividend reductions is 29 higher than the figure recorded in November 2021.
  • No U.S. firms omitted paying their dividends in November 2022, continuing the trend established since June 2021.

We sampled the data for 30 of the reported dividend cuts during November 2022. The next chart reveals even more signs of developing weakness throughout the U.S. economy.

Sampled Dividend Cuts in U.S. by Industrial Sector, 1 November 2022 - 30 November 2022

What's significant in this chart is the breadth of industrial sectors in which firms have declared they will reduce their dividends. There are many more sectors represented in this chart than have been the case in recent months.

Here's the list of firms cutting dividends from November 2022's sampling:

The pace of dividend cuts stands to be interesting going into the final month of 2022.

Reference

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 December 2021.