Dividend Increases Post Sharp Decline As Energy Issue Cuts Dominate

-Increases continue to decline with the dollar cuts substantially increasing;

-Energy issues account for two-thirds of the dollar cuts

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Apr 05, 2016, 10:30 ET

NEW YORK, April 5, 2016 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net increases (increases less decreases) rose $3.9 billion during the first quarter of 2016 for U.S. domestic common stocks, a substantial deceleration from the $12.6 billion increase registered during the first quarter of 2015 and the $17.9 billion posted in the first quarter of 2014. The dollar amount decline equates to a 68.9% year-over-year slowdown in dividend increases. On a 12-month period ending in March 2016, dividend net increases fell 39.4% to $30.1 billion compared to an increase of $49.6 billion for the corresponding period. Decreases over that time period increased 95.6%, with $18.7 billion in dividend cuts, compared to the prior periods' $9.6 billion.

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)

919 dividend increases were reported during Q1 2016 compared to 995 increases reported during Q1 2015, a 7.6% decrease.
For the 12-months ending March 2016, 2733 issues increased their payments, down from the 3226 issues that increased their payments during the 2015, a 15.3% decrease.

Dividend Decreases (defined as either a decrease or suspension)

252 issues decreased dividends in Q1 2016 compared to 172 in Q1 2014, a 46.5% increase.
For the 12-months, 584 issues decreased their dividend payments compared to 361 decreases in 2015, a 61.8% 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 up 47.7% from the 47.4% posted in Q4 2015, but down from the 48.6% rate in Q1 2015.
The weighted dividend yield for paying issues ticked up to 2.49% from last quarter's 2.52%, and the 2.51% seen at the end of Q1 2015.

"Energy issues accounted for 43% of the dividend cuts and 66% of the dollar cuts in the first quarter as big-cap issues now dominate the aggregate dividend cuts," 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^®, 417 issues (82.7%) currently pay a dividend. All 30 members of the Dow Jones Industrial Average^® pay a dividend.

Silverblatt found that 70.3% of the issues within the S&P MidCap 400 pay a cash dividend, a slight decrease from the 70.5% which paid at the end of 2015. Within the S&P SmallCap 600, 51.4% of the issues pay, down from the 53.6% which paid at the end of 2015.

Yields at the index level continued to vary greatly, with large-caps at 2.17% (a tick up from last quarter's 2.16%), mid-caps at 1.69% (down from last quarter's 1.71%) and small-caps at 1.47% (down from last quarter's 1.50%). For paying issues, the yields across market-size classifications continue to be compatible, with large-caps coming in at 2.54% (2.56% last quarter), mid-caps at 2.36% (2.42% last quarter) and small-caps at 2.50% (2.50% last quarter).

2016
"Dividends are being hit from both sides – within the S&P 500 the average dividend increase for Q1 2016 is 10.82%, down from 13.08% for 2015 and 17.50% for 2014," comments Silverblatt. "On the cut side, decreases are significantly up, with the aggregate dollar year-to-date up 97.3% over the first quarter of 2015, with energy responsible for 83.9% of the current dollar cut. However, the dividend increases still outweigh the decreases, as companies continue to increase, be it at a slower rate."

"For the remainder of 2016, pressure on both the Energy and Material sector issues are likely to continue, even if commodity prices stabilize and increase, resulting in more disappointing announcements. Based on current dividend policies, for the overall U.S. equity market, 2016 is likely to set another record in payments, especially in the large-cap S&P 500, but dividend investors should review their allocations, along with their income requirements, and expect a low single-digit increase," adds 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