U.S. Companies Continue To Slow Pace of Dividend Net Increases

Slow Q3 Dividend Growth Moves Beyond Energy Issues Even As Payouts Set Record Levels

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Oct 08, 2015, 09:30 ET

NEW YORK, Oct. 8, 2015 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net increases (increases less decreases) rose $10.0 billion during the third quarter of 2015 for U.S. domestic common stocks, a deceleration from the $12.3 billion increase registered during the third quarter of 2014. The dollar amount decline equates to a 19.1% year-over-year slowdown in dividend increases. For the 12 months ending September 2015, dividend net increases fell 15.1% to $49.1 billion compared to an increase of $55.5 billion for the corresponding period.

Additional findings from S&P Dow Jones Indices' quarterly analysis of the dividend activity of approximately 10,000 U.S. traded issues include:

Dividend Increases (defined as an increase in dividend payments)

497 dividend increases were reported during Q3 2015 compared to 563 increases reported during Q3 2014, an 11.7% decrease.
For the 12-month period ending September 2015, 3026 issues increased their payments from the 3222 issues that increased their payments during the prior 12-month period, a 6.1% decrease.

Dividend Decreases (defined as either a decrease or suspension)

105 issues decreased dividends in Q3 2015 compared to 65 in Q3 2014, a 61.5% increase.
For the 12-month period ending September 2015, 429 issues decreased their dividend payments compared to 275 decreases in the prior 12-month period, a 56.0% increase.

Non-S&P 500 domestic common issues (ASE, NYSE, NASD) paying a dividend

The percentage of non-S&P 500 domestic common issues paying a dividend was down to 48.2% from the 48.7% posted in Q2 2015, but up from the 47.2% rate in Q3 2014.
The weighted dividend yield for paying issues increased to 2.83% from last quarter's 2.59%, and the 2.50% seen at the end of Q3 2014.

"Energy issues continue to be the weak point for dividends, as commodity prices, particularly oil, remain at low levels, pressuring cash flow used for dividend payments," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Large-, Mid-, and Small-Cap Dividends
Within the large-cap S&P 500^®, 423 issues (83.8%) currently pay a dividend. All 30 members of the Dow Jones Industrial Average^® pay a dividend.

Silverblatt found that 70.5% of the issues within the S&P MidCap 400 pay a cash dividend, up from 67.5% at the end of Q3 2014. Within the S&P SmallCap 600, 53.9% of the issues pay, up from 51.2% which paid a year ago.

Yields at the index level continued to vary greatly, with large-caps at 2.29%, mid-caps at 1.74% and small-caps at 1.54%. For paying issues, the yields across market-size classifications continue to be compatible, with large-caps coming in at 2.67%, mid-caps at 2.45% and small-caps at 2.51%.

2015
"Based on the current dividend polices and declarations, 2015 will easily set another record year for cash dividend payments, with a nice increase over last year," notes Silverblatt. "However, growth rates for dividends have declined again. Energy issues still dominate the declines, but dividend cuts have now moved beyond Limited Partnerships and commodity based royalty associated issues into unrelated areas. At this point in time the four-year run of double-digit dividend payment gains appears to be in jeopardy. Dividend payment growth has slowed, and investors need to pay attention to the underlying drivers."

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SOURCE S&P Dow Jones Indices