U.S. Dividends Remain Under Pressure

NEW YORK, July 12, 2016 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net increases (increases less decreases) rose to $7.3 billion during the second quarter of 2016 for U.S. domestic common stocks, a substantial increase from Q1 2016, which netted a $3.9 billion gain. The gains remain 41.9% below Q2 2015, when net increases were $12.5 billion. For the 12-month period ending June 2016, net increases fell 49.9% to $24.8 billion, compared to an increase of $49.5 billion for the 12-month period ending June 2015. Decreases over the 12-month period ending June 2016 rose 157%, to $20.9 billion in total dividend cuts, from the $8.2 billion in cuts during the 12-month period ending June 2015. 

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):

• 504 dividend increases were reported during Q2 2016, compared to 562 increases reported during Q2 2015, a 10.3% year-over-year decline.
• For the 12-month period ending June 2016, 2,675 issues increased their payments, a 13.5% decrease from the 3,092 issues that increased their payments during the 12-month period ending June 2015.

Dividend Decreases (defined as either a decrease or suspension in dividend payments):

• 158 issues decreased dividends in Q2 2016, compared to 85 in Q2 2015, an 85.9% increase.
• For the 12-month period ending June 2016, 657 issues decreased their dividend payments, compared to 389 decreases in the 12-month period ending June 2015, a 68.9% increase.

Non-S&P 500® domestic common issues paying a dividend:

• The percentage of non-S&P 500 domestic common issues paying a dividend rose to 49.5% from the 47.7% posted in Q1 2016 and the 48.7% rate posted in Q2 2015.
• The weighted dividend yield for paying issues increased to 2.69% from 2.49% in Q1 2016 and the 2.59% seen during Q2 2015.

"Energy issues accounted for 43% of the dividend cuts and 71% of the dollar cuts in the second quarter, as mid-cap and small-cap issues were the majority of dividend dollar cuts," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Large-, Mid-, and Small-Cap Dividends:

418 issues, or 82.8%, within the S&P 500 currently pay a dividend. All 30 members of the Dow Jones Industrial Average® pay a dividend.

Silverblatt found that 69.3% of the issues within the S&P MidCap 400® pay a cash dividend, a decrease from 70.3% in Q1 2016. Within the S&P SmallCap 600®, 51.4% of the issues pay a dividend, which is unchanged from Q1 2016. 

Yields continued to vary, with large-caps at 2.17% (no change from the 2.17% in Q1 2016), mid-caps at 1.68% (1.69% in Q1 2016) and small-caps at 1.38% (1.47% in Q1 2016). The yields across dividend paying market-size classifications continue to be compatible, with large-caps coming in at 2.54% (the same as Q1 2016), mid-caps at 2.37% (2.36% in Q1 2016) and small-caps at 2.47% (2.50% in Q1 2016). 

2016

"U.S. dividends continue to be under pressure as fewer issues are increasing payments and those issues that do increase do so at a lower rate," added Silverblatt. "Within the S&P 500, the average dividend increase for Q2 2016 was 10.56%, down from 10.62% in Q1 2016 and 13.08% for all of 2015. The pace of dividend cuts continues to rise, as Q2 saw a substantial increase in cuts from mid- and small-cap energy issues, with the overall aggregate dollar 12-month cuts rising 157% over the prior 12-month period. Yet, the dividend increases continue to outweigh the decreases."

Silverblatt notes that for the remainder of 2016 pressure on both Energy and Materials issues are expected to continue, potentially resulting in disappointing announcements for earnings, capital investments, buybacks and dividends. Based on current dividend policies, the U.S. equity market in 2016 is positioned to set another record in payments, especially in the S&P 500, but the increase is seen as being in the mid-single digit range, not the double-digits seen in the past few years.

"The good news for dividends is that, while things are difficult, there is no 'DivExit,' as the majority of issues continue to increase, and have the resources to do so," concludes Silverblatt.

For more information about S&P Dow Jones Indices, please visit www.spdji.com.

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SOURCE S&P Dow Jones Indices

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