S&P Dow Jones Indices Reports U.S. Common Indicated Dividend Payments Increase $16.0 Billion in Q2 2024 Driven by Alphabet Initiation

Rhea-AI Summary

S&P Dow Jones Indices reported a significant increase in U.S. common indicated dividend payments for Q2 2024, driven primarily by Alphabet's $9.3 billion dividend initiation. The net indicated dividend change rose by $16.0 billion, similar to Q1 2024 and significantly higher than Q2 2023's $4.3 billion. Despite this growth, Q2 2024's total common dividend increases ($20.4 billion) were down 10.0% from Q1 2024 but more than doubled Q2 2023's $9.8 billion. Dividend decreases also dropped to $4.4 billion, a 34.4% decline from Q1 2024. For the 12-month period ending June 2024, dividend increases were $78.7 billion, a 21.1% rise from the prior year, with decreases rising by 29.2% to $24.1 billion. The S&P 500 index marked a per-share dividend increase of 1.2% in Q2 2024, reaching $18.28, and an aggregate dividend payment of $153.4 billion. The quarter saw a notable 17.2% year-over-year increase in dividend initiations, while decreases significantly reduced by 67.7%.

Positive

• Net indicated dividend rate increased by $16.0 billion in Q2 2024.
• Alphabet's $9.3 billion dividend initiation significantly boosted total increases.
• Dividend increases for Q2 2024 were $20.4 billion, more than doubling Q2 2023's $9.8 billion.
• Total dividend increases for the 12 months ending June 2024 were $78.7 billion, up 21.1% from the prior year.
• S&P 500 Q2 2024 per share dividend increased by 1.2%, reaching $18.28.
• Aggregate S&P 500 dividend payments for Q2 2024 rose to $153.4 billion.

Negative

• Q2 2024 total common dividend increases were down 10% from Q1 2024.
• Dividend decreases for the 12 months ending June 2024 rose by 29.2% to $24.1 billion.

Insights

Financial Analyst

The announcement of a significant increase in indicated dividend payments, largely driven by Alphabet's initiation, is an event of substantial interest to investors. The fact that U.S. common dividend increases for Q2 2024 were $20.4 billion, despite a slight decrease from Q1 2024, indicates a persistent trend towards higher shareholder rewards. This signals confidence among major corporations in their earnings stability and future growth prospects. Alphabet's initiation alone contributed $9.3 billion, a remarkable figure that underscores the tech giant's strong financial health and commitment to returning capital to shareholders.

For retail investors, this uptick in dividends is a positive sign, suggesting potential for increased returns from dividend-paying stocks. Additionally, the decline in dividend decreases to $4.4 billion in Q2 2024 from $6.7 billion in Q1 2024 and the year-over-year drop by 67.7% in the number of issues decreasing dividends, further strengthens the narrative of financial resilience. Companies are showing a greater propensity to maintain or enhance their dividend payouts, which is encouraging for income-focused investors.

Moreover, the aggregate record dividend payments highlight the importance of dividend stocks in a balanced portfolio, especially in an era of higher interest rates. Investors should also note the sector-specific performance, particularly the dominance of large-cap stocks in driving dividend growth. This trend aligns with the broader market dynamics where larger, more established companies with robust cash flows are better positioned to sustain and increase dividends amidst economic uncertainties.

Market Research Analyst

From a market research perspective, the reported figures offer a deeper understanding of market sentiment and corporate behavior. The increase in the number of dividend hikes to 539 in Q2 2024, up 17.2% from Q2 2023, reflects a broad-based confidence among companies about their financial performance. This is particularly noteworthy given the macroeconomic backdrop of higher interest rates and cautious future outlooks.

The forward-looking statements about dividend growth, despite economic uncertainties, suggest that companies are strategically using dividends as a tool to attract and retain investors. This is a tactical move to enhance shareholder value and can be seen as a response to market demands for more predictable returns. The data also provides insights into sectoral trends, with large-cap companies leading the charge, which may guide retail investors towards specific segments of the market that are perceived to be more stable and rewarding.

Furthermore, the reference to the significant role of the 'Magnificent 7' in dividend growth points to the outsized impact of top-performing tech giants on the overall market. This emphasizes the importance of diversification within a portfolio to mitigate risk associated with overexposure to a few high-performing stocks. Investors should be mindful of these dynamics when making investment decisions.

Economic Analyst

Analyzing the economic implications, the increase in indicated dividends amid a backdrop of higher interest rates and uncertain future FOMC actions is revealing. It indicates that many companies are still able to generate sufficient free cash flow to support generous dividend policies. This is a strong signal of economic resilience and adaptability among major corporations.

The decline in dividend decreases and the increase in the breadth of dividend growth to 25.6, the strongest since Q2 2007, highlight a positive economic trend. This breadth metric quantifies the widespread nature of dividend increases, suggesting broad-based financial health across various industries. In a higher interest rate environment, the decision by companies to maintain or increase dividends speaks volumes about their confidence in ongoing profitability and cash flow generation.

For retail investors, these economic trends imply that dividend-paying stocks could offer a relatively stable source of returns, even as bond yields remain competitive. The strategic importance of dividend payments as part of a company's financial management and investor relations strategy is underscored by these findings. However, investors should also be aware of the potential for economic or geopolitical events to disrupt this positive trajectory, as noted in the outlook for the rest of 2024.

• Q2 2024 U.S. common dividend increases were $20.4 billion, down 10.0% from $22.7 billion in Q1 2024 and up 108% from $9.8 billion in Q2 2023.
• Q2 2024 U.S. common dividend decreases were $4.4 billion, down 34.4% from $6.7 billion in Q1 2024, and down 20.7% from $5.5 billion in Q2 2023.
• Q2 2024 net indicated dividend rate change increased $16.0 billion.
• The 12-months ending June 2024, U.S. common dividend increases were $78.7 billion, up 21.1% from the 12-month June 2023 period's $65.0 billion; decreases were up 29.2% to $24.1 billion, compared to $18.7 billion for the prior 12-month period.
• The net 12-month June 2024 indicated dividend increase was $54.6 billion, compared to $46.3 billion for the prior 12-month June 2023 period.

NEW YORK, July 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 $16.05 billion during Q2 2024, compared to the $16.03 billion increase in Q1 2024 and the $4.3 billion increase in Q2 2023. Increases were $20.4 billion versus $22.7 billion for Q1 2024 and $9.8 billion in Q2 2023, and decreases were $4.4 billion compared to $6.7 billion in Q1 2024 and $5.5 billion in Q2 2023. Alphabet's initiation accounted for $9.3 billion of the Q2 2024 increase, as Q1 2024's Brookings, Meta Platforms and Salesforce initiations accounted for $7.2 billion.

For the 12-months ending June 2024, the net dividend rate increased $54.6 billion, compared to the net $46.3 billion for the 12-months ending June 2023. For 2023, it was up $36.5 billion compared to 2022's $68.2 billion, 2021's $69.8 billion, with the 2020 net change negative, as 43 S&P 500 issues suspended their dividends, at -$40.8 billion. Increases for the 12 months June 2024 were $78.7 billion versus $65.0 billion, and decreases were $24.1 billion compared to $18.7 billion. 

"The number of dividend increases again rose in Q2 2024 compared to the previous quarter, but still trailed in comparison 12-month year-over-over as companies continued to remain cautious when committing to future payments. While markets moved higher in Q2 2024, the market gain was not as large or as broad as the previous Q1 period, as interest rates, while down, remained higher for longer, coupled with uncertain forward FOMC actions. Dividend decreases declined as dividend breadth (increases/decreases) reached 25.6, the strongest breadth since Q2 2007's 30.1, which quantifies the upward movement," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

Silverblatt continued: "For the rest of 2024, the continued uncertainty over the economy and the timing of expected interest rate cuts will likely limit the size of dividend increases. Absent an economic or geopolitical event, dividend growth is expected to selectively continue. S&P 500 large caps have performed better than most in the first half of 2024, as the Magnificent 7 have dominated the returns. The index is expected to post a 6% increase in dividend payments for 2024 compared to its 5.1% increase in 2023 and the 10.8% increase seen in 2022."

Silverblatt also noted that following the Fed's positive stress test results and post the first half close, six major banks (BAC, C, GS, JPM, MS and WFC) increased their annual dividends by $3.5 billion, with an average increase of 9.1%. With earnings season around the corner, Silverblatt expects more increases to come.

Silverblatt concluded: "The noticeable take-away for both the first and second quarter of 2024 were the large-caps. In April, Alphabet initiated a $9.3 billion dividend rate, joining the Q1 dividend initiations from Bookings ($1.2 billion), Meta Platforms ($4.4 billion) and Salesforce ($1.5 billion), and accounting for 53% of the S&P 500's year-to-date indicated dividend gain. While the gains without the initiations are still seen as setting a record S&P 500 dividend payment for 2024, their forward cash commitment to dividends will significantly increase the payout and give investors and non-paying Boards something to think about."

S&P 500^® Dividends

On a per share basis, S&P 500 Q2 2024 dividend payments increased 1.2% to $18.28 per share when compared to Q1 2024's $18.06 and is up 6.7% from Q2 2023's $17.13 payment (the record is Q4 2023 at $18.38). On an aggregate basis, index constituents paid $153.4 billion in dividends for the quarter, up from $151.6 billion paid in Q1 2024 and up from $143.2 billion in Q2 2023. For the 12-months ending June 2024, the index paid a record $71.98 per share, up from $68.71 for the prior 12-month period, with an aggregate record $603.3 billion payment to shareholders compared to the prior period's $576.4 billion.

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

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

• 539 dividend increases were reported during Q2 2024 compared to 460 during Q2 2023, a 17.2% year-over-year increase.
• Total dividend increases were $20.4 billion for the quarter, up from $9.8 billion in Q2 2023.
• For the 12-months ending in June 2024, 2,490 issues increased their payments, a decrease of 7.8% compared to the 2,702 issues for the 12-months ending in June 2023.
• Total dividend increases for the 12-month period were $78.7 billion, up from $65.0 billion in the prior 12-month period.

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

• 21 issues decreased dividends in Q2 2024, a 67.7% year-over-year decrease compared to 65 issues in Q2 2023.
• Dividend decreases were $4.4 billion in Q2 2024, compared to $5.5 billion in Q2 2023.
• For the 12-months ending in June 2024, 175 issues decreased their dividend payments, a 63.3% decrease compared to the 477 decreases within the prior 12-month period.
• Dividend decreases were $24.1 billion for the current 12-month period, a 29.2% increase from prior 12-month period's $18.7 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 decreased to 20.3% from Q1 2024's 20.5% and was up from Q2 2023's 20.1%.
• The weighted indicated dividend yield for paying issues was 2.92% in Q2 2024, up from 2.86% in Q1 2024 and down from 3.09% in Q2 2023. The average indicated yield increased to 3.37% in Q2 2024 compared to Q1 2024's 3.28% and was down from 3.42% in Q2 2023.

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

• 403 issues or 80.1% within the S&P 500 currently pay a dividend, down from 404 in Q1 2024 and the same as Q2 2023; 28 of the 30 constituents within the Dow Jones Industrial Average^® pay a dividend with an average yield of 2.23% for all issues and 2.39% for the paying issues.
• 65.8% of S&P MidCap 400^® issues pay a dividend, up from 65.6% in Q1 2024 and up from 64.6% in Q2 2023. 59.1% of S&P SmallCap 600^® issues pay a dividend, down from 59.7% in Q1 2024 and up from 55.4% in Q2 2023.
• Yields mostly increased for Q2 2024, as large-cap yields decreased (as their prices increased significantly more) to 1.35% (1.38% for Q1 2024 and 1.55% for Q2 2023), mid-caps increased to 1.51% (1.48% for Q1 2024 and 1.63% for Q2 2023), and small-caps increased to 1.81% (1.77% for Q1 2024 and 1.73% for Q2 2023).
• The yields across dividend-paying market-size classifications varied with large-caps declining to 1.61% (1.72% in Q1 2024 and 2.01% in Q2 2023), mid-caps increasing to 2.26% (2.18% in Q1 2024 and 2.47% in Q2 2023), and small-caps increasing to 3.06% (2.90% in Q1 2024 and 3.11% in Q2 2023).

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

ABOUT S&P DOW JONES INDICES

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 U.S. common indicated dividend payments increase in Q2 2024?

U.S. common indicated dividend payments increased by $16.0 billion in Q2 2024.

What was the impact of Alphabet's dividend initiation in Q2 2024?

Alphabet's $9.3 billion dividend initiation significantly boosted the total Q2 2024 dividend increases.

How did Q2 2024 dividend increases compare to Q1 2024 and Q2 2023?

Q2 2024 dividend increases were $20.4 billion, down 10% from Q1 2024 but more than doubled Q2 2023's $9.8 billion.

What was the net indicated dividend rate change for the 12 months ending June 2024?

The net indicated dividend rate change for the 12 months ending June 2024 was $54.6 billion.

How much did S&P 500 per share dividends increase in Q2 2024?

S&P 500 per share dividends increased by 1.2%, reaching $18.28 in Q2 2024.

What was the total aggregate dividend payment for S&P 500 in Q2 2024?

The total aggregate dividend payment for S&P 500 in Q2 2024 was $153.4 billion.