S&P Dow Jones Indices Reports U.S. Common Indicated Dividend Payments Increase $13.7 Billion in Q4 2023 and $36.5 Billion in 2023

Rhea-AI Summary

S&P Dow Jones Indices reported that the indicated dividend net changes for U.S. domestic common stocks increased $13.7 billion in Q4 2023, compared to an $8.8 billion increase in Q3 2023 and a $14.6 billion increase in Q4 2022. The net dividend rate decreased $36.5 billion for 2023, compared to the net $68.2 billion for 2022. On a per share basis, S&P 500 Q4 2023 dividend payments increased 6.5% to a record $18.32 per share, from Q3 2023's $17.26 and up 5.7% from Q4 2022's $17.39 payment. The index paid an annual record of $70.30 per share for 2023, up from $66.92 for 2022, with an aggregate record $588.2 billion payment to shareholders compared to 2022's $564.6 billion.

Positive

• Indicated dividend net changes for U.S. domestic common stocks increased by $13.7 billion in Q4 2023
• S&P 500 Q4 2023 dividend payments increased 6.5% to a record $18.32 per share
• The index paid an annual record of $70.30 per share for 2023, up from $66.92 for 2022

Negative

• The net dividend rate decreased $36.5 billion for 2023, compared to the net $68.2 billion for 2022

Insights

Financial Analyst

The recent data on U.S. common dividend changes presents a nuanced perspective on corporate financial health and investor returns. The observed decrease in total dividend increases and the significant reduction in dividend decreases year-over-year suggest a cautious yet stabilizing approach by companies in managing shareholder distributions. This cautiousness may be interpreted as a response to economic uncertainty, potentially driven by factors such as interest rate movements and broader market volatility.

From a financial analysis standpoint, the decline in overall dividend increases year-over-year, coupled with a substantial uptick in dividend decreases, indicates a shift in corporate confidence and potentially tighter cash flow management. Companies may be prioritizing liquidity and balance sheet strength over shareholder yield in the face of economic headwinds. However, the record per share and aggregate dividend payments by S&P 500 constituents in Q4 2023 reflect continued commitment to returning value to shareholders among large-cap firms.

Investors may view these mixed signals as a need for selective investment strategies, focusing on sectors and companies that maintain strong dividend growth amidst broader market caution. The expectation of continued dividend growth in 2024 suggests a recovery in corporate confidence, albeit at a potentially slower pace.

Market Research Analyst

The reduction in dividend increases and the sharp decline in dividend decreases have implications for market sentiment and investment trends. The decrease in dividend increases may signal a broader trend of conservative corporate behavior in response to economic uncertainty, while the decline in dividend decreases reflects a recovery from the more aggressive cuts seen in previous periods.

It is important to note the sectoral differences that may underlie these aggregate trends. Companies in certain industries may exhibit more resilience and a greater ability to sustain or increase dividends, while others may face continued pressure. Investors and market participants should analyze industry-specific factors such as consumer demand, regulatory changes and technological disruptions to better understand the dividend landscape.

Furthermore, the historical context provided by the net indicated dividend changes over the past years offers insight into the cyclical nature of dividend policies and the impact of broader economic cycles on corporate decision-making. The data suggests a return to pre-pandemic patterns, albeit with new considerations such as inflationary pressures and geopolitical tensions influencing corporate strategies.

Economist

The reported dividend activity reflects underlying macroeconomic conditions and corporate responses to them. The cautious approach to dividend increases could be a reaction to the economic uncertainty that businesses face, including potential recessionary pressures and the effects of monetary policy shifts. The significant reduction in dividend decreases from the previous quarter signals an easing of the acute stress that necessitated more substantial cuts, likely due to improved economic conditions or corporate adaptations.

Looking ahead, the projected increase in dividends for 2024, albeit at a more modest rate, suggests an anticipation of economic stabilization or growth. This aligns with the expectation of interest rate normalization, which could relieve some of the cost pressures on businesses. However, the caveat of potential economic or geopolitical events highlights the fragility of these projections.

The variance in dividend yields across market capitalizations and the increase in the percentage of dividend-paying issues within the S&P MidCap 400 and SmallCap 600 indices could indicate a broadening of investment opportunities for income-seeking investors. Nonetheless, the lower yields in large-caps may reflect a premium placed on the perceived stability and resilience of larger, well-established companies.

• Q4 2023 U.S. common dividend increases were $17.5 billion, down 2.8% from $18.0 billion in Q3 2023 and up 7.4% from $16.3 billion in Q4 2022.
• Q4 2023 U.S. common dividend decreases were $3.9 billion, down 58.1% from $9.2 billion in Q3 2023, and up 125% from $1.7 billion in Q4 2022.
• Q4 2023 net indicated dividend rate change increased $13.7 billion, compared to $8.8 billion in Q3 2023 and $14.6 billion in Q4 2022.
• For all of 2023, U.S. common dividend increases were $65.1 billion, down 21.1% from 2022's $82.5 billion; decreases were up 100.1% to $28.6 billion, compared to $14.3 billion for 2022.
• The net 2023 indicated dividend decline was $36.5 billion, compared to $68.2 billion in 2022, $69.8 billion in 2021 and a negative $40.8 billion in 2020.

NEW YORK, Jan. 3, 2024 /PRNewswire/ -- S&P Dow Jones Indices announced today that the indicated dividend net changes (increases less decreases) for U.S. domestic common stocks increased $13.7 billion during Q4 2023, compared to an $8.8 billion increase in Q3 2023 and a $14.6 billion increase in Q4 2022. Increases were $17.5 billion versus $18.0 billion for Q3 2023, and decreases were $3.9 billion compared to $9.2 billion in Q3 2023.

For all of 2023, the net dividend rate decreased $36.5 billion, compared to the net $68.2 billion for 2022. Increases were $65.1 billion versus $82.5 billion, and decreases were $28.6 billion compared to $14.3 billion.

"The number of dividend increases slowed in the fourth quarter as companies appeared to be more cautious when committing to them. As markets moved higher, and interest rates were seen near or at their peaks, dividend decreases significantly declined," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Silverblatt continued: "Given the uncertainty surrounding the economy, interest rates potentially at or near their highs, and the belief that the Fed may start to reduce rates in the first half of 2023, the higher-for-longer approach from companies is expected to continue. This would result in a more cautious level of dividend commitments going forward. For 2024, the dollar aggregate of dividends is expected to increase once again. Absent an economic or geopolitical event, S&P 500 large caps appear to be weathering volatility better, as the index is expected to post its 15^th consecutive year of dividend increases. In addition, the index is also expected to log its 13^th consecutive record year, with a 4.5% - 5% increase in payments for 2024, compared to its 5.1% increase in 2023 and its 10.8% increase in 2022. Overall, companies will likely remain cautious in 2024, as they consider both consumer and government spending and also any impact to the political environment."

S&P 500^® Dividends

On a per share basis, S&P 500 Q4 2023 dividend payments increased 6.5% to a record $18.32 per share, from Q3 2023's $17.26 and up 5.7% from Q4 2022's $17.39 payment. On an aggregate basis, index constituents paid a record $154.1 billion in dividends for the quarter, up from the $144.2 billion paid in Q3 2023 and up from $146.1 billion in Q4 2022. For 2023, the index paid an annual record of $70.30 per share, up from $66.92 for 2022, with an aggregate record $588.2 billion payment to shareholders compared to 2022's $564.6 billion.

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

Dividend Increases (defined as either an increase or initiation in dividend payments):

• 707 dividend increases were reported during Q4 2023 compared to 780 during Q4 2022, a 9.4% year-over-year decrease.
• Total dividend increases were $17.5 billion for the quarter, up from $16.3 billion in Q4 2022.
• For 2023, 2,548 issues increased their payments, a decrease of 9.9% compared to the 2,827 issues for 2022.
• Total dividend increases for the 2023 period were $65.1 billion, down from $82.5 billion in 2022.

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

• 41 issues decreased dividends in Q4 2023, a 69.4% year-over-year decrease compared to 134 issues in Q4 2022.
• Dividend decreases were $3.9 billion in Q4 2023, compared to $1.7 billion in Q4 2022.
• For 2023, 386 issues decreased their dividend payments, a 22.2% increase compared to the 316 decreases in 2022.
• Dividend decreases were $28.6 billion for 2023, a 100.1% increase from 2022's $14.3 billion.

Non-S&P 500 Domestic Common Issues (for issues yielding 10% or less):

• The percentage of non-S&P 500 domestic dividend-paying common issues remained unchanged from Q3 2023 at 20.4%, and up from the Q4 2022 20.0%.
• The weighted indicated dividend yield for paying issues was 2.93% in Q4 2023, down 3.14% from Q3 2022 and down 3.01% from Q4 2022. The average indicated yield decreased to 3.23% in Q4 2023 compared to Q3 2023's 3.50%, and up 3.21% from Q4 2022.

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

• 403 issues or 80.1% within the S&P 500 currently pay a dividend, up from the 401 in Q3 2023 and up from the 399 issues of Q4 2022; 28 of the 30 constituents within the Dow Jones Industrial Average^® pay a dividend (average yield 2.54% for all issues and 2.72% for the paying issues).
• 65.8% of S&P MidCap 400^® issues pay a dividend, up from 65.3% in Q3 2023 and up from 63.8% in Q4 2022; 57.8% of S&P SmallCap 600^® issues pay a dividend, up from 57.1% in Q3 2023 and up from 52.9% in Q4 2022.
• Yields decreased for Q4 2023 as prices increased. Large-cap yields were 1.48% (1.63% for Q3 2023 and 1.77% for Q4 2022), mid-caps increased to 1.61% (1.71% for Q3 2023 and 1.70% for Q4 2022), and small-caps increased to 1.73% (1.95% for Q3 2023 and 1.69% for Q4 2022).
• The yields across dividend-paying market-size classifications varied: with large-caps declining to 1.93% (2.11% in Q3 2023 and 2.19% in Q4 2022), mid-caps declining to 2.39% (2.54% in Q3 2023 and 2.58% in Q4 2022) and small-caps declining to 2.93% (3.34% in Q3 2023 and 2.92% in Q4 2022).

For more information about S&P Dow Jones Indices, please visit https://www.spglobal.com/spdji/en/.

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S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit https://www.spglobal.com/spdji/en/.

S&P DJI MEDIA CONTACTS:

April Kabahar, Head of Communications
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INDEX INVESTMENT STRATEGY:

Howard Silverblatt, Senior Index Analyst
(+1) 973 769 2306 howard.silverblatt@spglobal.com 

 

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SOURCE S&P Dow Jones Indices

FAQ

How much did the indicated dividend net changes increase in Q4 2023 for U.S. domestic common stocks?

The indicated dividend net changes for U.S. domestic common stocks increased by $13.7 billion in Q4 2023.

What was the percentage increase in S&P 500 Q4 2023 dividend payments per share?

S&P 500 Q4 2023 dividend payments increased 6.5% to a record $18.32 per share.

What was the annual dividend payment per share for 2023 compared to 2022?

The index paid an annual record of $70.30 per share for 2023, up from $66.92 for 2022.

How much did the net dividend rate decrease in 2023 compared to 2022?

The net dividend rate decreased $36.5 billion for 2023, compared to the net $68.2 billion for 2022.