Want to see something pretty incredible? The chart below shows all the data we have for the number of public U.S. companies that have either increased or decreased their cash dividends since January 2004. Take a close look at the number of companies that Standard and Poor has initially recorded as having increased their dividends during the month of November 2014 and compare it with all the figures that have previously been reported.
Assuming this number will not dramatically revised downward, it would mean that 1,773 of the 2,979 declarations that U.S. companies made about their dividend payments in November 2014 involved increasing them. And yet, the amount of dividends that these companies are expected to pay in the future didn't increase all that much during November 2014!
That 1,773 figure would nearly five times larger than the previous record of 368 companies that declared they would increase their dividends back in January 2014.
That number was interesting enough that we dug deeper, tapping the Wayback Machine's archive of the data the Wall Street Journal's posts regarding the declarations that U.S. companies make on a daily basis. Although a week of data is missing from the beginning of the month, none of the data that was recorded suggests that anywhere near that many companies increased their dividends during the month, so we would anticipate that this figure will be corrected by S&P at some point in the future.
Update 2:30 PM EST: S&P's Howard Silverblatt moved fast to fix what turned out to be a typo - the actual number of U.S. companies increasing their dividends in November 2014 is 173! Our updated chart is below:
Meanwhile, we find that the number of companies that declared they would be decreasing their dividends increased slightly during the month.
At 17 companies, we find this figure is consistent with recessionary conditions being present in the U.S. economy, and more specifically, with what we describe as a microrecession. A microrecession represents the situation where recessionary conditions are present in the U.S. economy, but which are too limited in scope, severity or duration to be considered to be a full blown recession as defined by the National Bureau of Economic Research, the official arbiters of whether the U.S. economy is expanding or contracting.
Since we already went to the trouble of reviewing the archive of dividend declaration for the month of November 2014, we do have some insight into which companies are decreasing their dividends. We found that a number of oil industry-related firms cut their dividends during the month, which is perhaps the first confirmation we have that falling oil prices are negatively impacting that industry in the U.S. We counted nine such companies in the available archived data for the month.
If not for those particular dividend cuts, the number of companies cutting their dividends in November 2014 would have fallen below our identified recession line, indicating that much of the rest of the U.S. economy was comparatively healthy during the month, which might be expected since falling oil and fuel prices is a positive factor for other parts of the U.S. economy. Thus far then, the negative impact of these particular recessionary conditions for U.S. businesses is limited in its scope.
Data Source
Standard & Poor. Monthly Dividend Action Report. [Excel Spreadsheet]. Accessed 1 December 2014.
Labels: dividends, recession, stock market
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