U.S. Companies Slow Pace of Dividend Net Increases

Energy Issues Continue To Account for a Disproportionate Share of the Cuts;

Trusts and L.P. Remain Volatile and Inconsistent

Jul 07, 2015, 09:30 ET from S&P Dow Jones Indices

NEW YORK, July 7, 2015 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net increases (increases less decreases) rose $12.5 billion during the second quarter of 2015 for U.S. domestic common stocks, a deceleration from the $12.6 billion increase registered during the second quarter of 2014. The dollar amount decline equates to a 0.6% year-over-year slowdown in dividend increases. For the 12 months ending June 2015, dividend net increases fell 10.2% to $49.5 billion compared to an increase of $55.1 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)

  • 562 dividend increases were reported during the second quarter of 2015 compared to 696 increases reported during the second quarter of 2014, a 19.3% decrease.
  • For the 12-month period ending June 2015, 3092 issues increased their payments from the 3134 issues that increased their payments during the prior 12-month period, a 1.3% increase.

Dividend Decreases (defined as either a decrease or suspension)

  • 85 companies decreased dividends in Q2 2015 compared to 57 in Q1 2014.
  • For 12-month period ending June 2015, 389 companies decreased their dividend payments compared to 254 decreases in the prior 12-month period.

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

  • The percentage of non-S&P 500 domestic common issues (ASE, NYSE, NASD) paying a dividend was slightly up to 48.7% from the 48.6% during Q1 2015, and the 47.1% rate in Q2 2014.
  • The weighted dividend yield increased to 2.59% from last quarter's 2.51%, and the 2.44% seen at the end of the second quarter of 2014.

"Energy continues to be the weak point for dividends, as they represented 45% of all dividend cuts during the quarter, with Trusts and L.P.'s becoming very volatile and inconsistent in their 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®, 421 issues (83.9%) currently pay a dividend. All 30 members of the Dow Jones Industrial Average® pay a dividend.

Silverblatt found that 70.5% and 54.2% of issues within the S&P MidCap 400 and S&P SmallCap 600, respectively, pay dividends. 

Yields at the index level continued to vary greatly, with large-caps at 2.09%, mid-caps at 1.54% and small-caps at 1.34%. For paying issues, the yields across market-size classifications continue to be compatible, with large-caps coming in at 2.45%, mid-caps at 2.18% and small-caps at 2.26%. 

Dividend growth continues, but the rate of growth has declined.  At the half-way mark for 2015, the dividend picture is still very positive, as increases remain strong, with another record of actual cash payments expected.

"Energy still remains the main concern for dividends, as the sector represented 45% of all the dividend decreases in the quarter," adds Silverblatt. "Given the current declared policies, it would take a catastrophic event (or government action) for 2015 not to be a record year.  The question at this point is will we extend the four-year run of double-digit growth in actual payments. The answer appears to be that we will be very close to that mark, and while the actual rate is relevant to the official record, it is a nice neighborhood to be in."

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SOURCE S&P Dow Jones Indices