Q4'15 Dividends: Increases Lose Pace, Decreases Dominated by Energy

Energy Companies Account for Half the Cuts and 80% of the Dollar Change

Jan 05, 2016, 11:00 ET from S&P Dow Jones Indices

NEW YORK, Jan. 5, 2016 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net increases (increases less decreases) rose $3.6 billion during the fourth quarter of 2015 for U.S. domestic common stocks, a massive deceleration from the $12.0 billion increase registered during the fourth quarter of 2014. In dollar terms, the decline equates to a 70.0% year-over-year slowdown in dividend increases. For the full year 2015, dividend net increases fell 29.4% to $38.7 billion compared to an increase of $54.8 billion for the corresponding period in 2014.

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

Dividend Increases (defined as an increase in dividend payments)

  • 755 dividend increases were reported during Q4 2015 compared to 971 increases reported during Q4 2014, a 22.2% decrease.
  • For 2015, 2810 issues increased their payments, down from the 3308 issues that increased their payments during the 2014, a 15.1% decrease.

Dividend Decreases (defined as either a decrease or suspension)

  • 142 issues decreased dividends in Q4 2015 compared to 67 in Q4 2014, a 112% increase.
  • For 2015, 504 issues decreased their dividend payments compared to 291 decreases in 2014, a 73.2% 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 to 47.4% from the 46.7% posted in Q3 2015, and the 47.0% rate in Q4 2014.
  • The weighted dividend yield for paying issues increased to 2.74% from last quarter's 2.83%, and the 2.45% seen at the end of Q4 2014.

"Energy issues accounted for 48% of the dividend cuts and 80% of the dollar cuts in the fourth quarter," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "The dividend cuts to Limited Partnerships and royalty related issues which began near the end of 2014 continued into 2015, starting with the small-cap issues and have now moved to the large-cap issues."

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 70.5% of the issues within the S&P MidCap 400 pay a cash dividend, the same as in the third quarter, but up from the 68% which paid at the end of 2014.  Within the S&P SmallCap 600, 53.6% of the issues pay, down from the 53.9% which paid at the end of the third quarter, but up from 52.7% which paid a year ago. 

Yields at the index level continued to vary greatly, with large-caps at 2.16%, mid-caps at 1.71% and small-caps at 1.50%. For paying issues, the yields across market-size classifications continue to be compatible, with large-caps coming in at 2.56%, mid-caps at 2.42% and small-caps at 2.50%. 

"Looking ahead to 2016, a key statistic to note is that S&P 500's average dividend increase of 13.08% for 2015 was significantly lower than 2014's 17.50%," comments Silverblatt. "This trend is likely to continue given the earnings, cash flow, low inflation and slow economic recovery. Based on current dividend polices, with an eye on issues that may be straining themselves, as well as those with higher dividend coverage rates and a strong history of annual increases, 2016 would appear to extend the record payment years, but with mid-single digit dividend increases."

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SOURCE S&P Dow Jones Indices