September 2019 was the worst month for dividend increases since September 2011. For dividend cuts, it was borderline bad, which is consistent with recessionary conditions being present within the U.S. economy. The overall picture these two bits of data create is of an economy that is slowing considerably.

The following chart shows the monthly data for dividend increases and decreases as reported by Standard & Poor from January 2004 through September 2019:

Here are the numbers for U.S. dividends during September 2019, with comparisons to August 2019 and to September 2018:

• 3,686 U.S. firms issued some sort of declaration regarding their dividends in September 2019, up by 146 from August 2019's total of 3,540, and also up year-over-year from September 2018's 3,623.
• There were 21 firms who announced they would pay an extra, or special, dividend to their shareholders, which was down from the 34 that did in August 2019, and down slightly from the 24 that paid out an extra dividend back in September 2018.
• September 2019 was the worst single month for dividend increases since September 2011, with just 50 recorded in both these months. That compares with the 125 dividend increases announced in August 2019 and the 71 dividend rises announced last year in September 2018.
• Dividend decreases were more plentiful in September 2019, with 29 cuts announced during the month. That figure compares with the 20 announced during the previous month and the 26 announced during the same month back in 2018.
• The number of distressed firms opting to omit making regular dividend payments increased to 7 in September 2019, up from 4 in August 2019, and also up from the single firm that omitted paying dividends in September 2018.

And since we're at the end of the third quarter of 2019, here is the dividend metadata for 2019-Q3, which we've compared with 2019-Q2 and 2018-Q3.

• There were 314 dividend rises announced during the third quarter of 2019, 75 fewer than the 389 announced in 2019-Q2, and 59 less than the 373 dividend increases announced in the previous year's third quarter.
• 80 U.S. firms announced they would pay an extra, or special, dividend to their shareholders in 2019-Q3. That figure is 21 less than the 101 extra dividends announced in the second quarter of 2019, but 3 more than the 77 that were announced back in 2018-Q3.
• In 2019-Q3, 80 U.S. companies announced they would cut their dividend payments to shareholders, while 13 announced they would omit making dividend payments during the quarter, a combined total of 93. The previous quarter of 2019-Q2 saw 59 dividend cuts and 3 omissions for a combined total of 62, and the year ago quarter of 2018-Q3 had 64 dividend cuts with 3 omissions, for a combined total of 67 distressed firms.

We've dug deeper into the data for the quarter's dividend cuts, mining our two near real-time sources for announcements of dividend reductions, Seeking Alpha and the Wall Street Journal. We've broken that list up into two parts: variable dividend payers and fixed dividend payers.

The following list of 17 U.S. firms that have cut dividends during 2019-Q3 includes only those that pay variable dividends from one period to the next, often as a straight percentage of their earnings. This category includes a number of firms that pay dividends monthly, where several of these firms may appear in the list more than once.

• Sabine Royalty Trust (NYSE: SBR)
• Mesabi Trust (NYSE: MSB)
• Mesa Royalty Trust (NYSE: MTR)
• PermRock Royalty Trust (NYSE: PRT)
• Cross Timbers Royalty Trust (NYSE: CRT)
• Permianville Royalty Trust (NYSE: PVL)
• Pacific Coast Oil Trust (NYSE: ROYT)
• SandRidge Mississippian Trust II (NYSE: SDR)
• Nordic American Tankers (NYSE: NAT)
• Sturm Ruger (NYSE: RGR)
• ECA Marcellus Trust I (NYSE: ECT)
• Mesa Royalty Trust (NYSE: MTR)
• Permian Basin Royalty Trust (NYSE: PBT)
• Permianville Royalty Trust (NYSE: PVL)
• Permian Basin Royalty Trust (NYSE: PBT)
• Cross Timbers Royalty Trust (NYSE: CRT)
• PermRock Royalty Trust (NYSE: PRT)

All but two of these firms hail from the oil and gas producing sector of the U.S. economy, which went through a rough patch with falling oil prices in recent months (late April to mid-June 2019), which will translate into dividend cuts for these firms in subsequent months. Oil prices have risen more recently thanks to geopolitical tensions, where we have observed the number of these firms announcing dividend cuts decline to relatively healthy levels in recent months, which we believe is why the overall number of dividend cuts in the market only appears borderline bad for September 2019. With oil prices having spiked and now falling, we would anticipate the number of dividend cuts in this sector to increase in upcoming months.

A bigger source of concern for investors are firms whose corporate boards set their cash dividend payouts to their shareholding owners independently of their revenues and earnings, where we have counted 16 in our 2019-Q3 sample, which we've listed below.

• Columbia Banking System (NYSE: COLB)
• BlackRock Capital Investment (NASDAQ: BKCC)
• Och-Ziff Capital Management (NYSE: OZM)
• Falcon Minerals (NASDAQ: FLMN)
• AG Mortgage Investment Trust (REIT) (NYSE: MITT)
• Kingstone (NASDAQ: KINS)
• Entercom Communications (NYSE: ETM)
• Portman Ridge Finance (NYSE: PTMN)
• Dynex Capital (NYSE: DX)
• Briggs & Stratton (NYSE: BGG)
• Riverview Financial (OTCQX: RIVE)
• Cherry Hill Mortgage (NYSE: CHMI)
• Friedman Industries (NYSE: FRD)
• Anworth Mortgage Asset (REIT) (NYSE: ANH)
• Fluor (NYSE: FLR)

Twelve of these firms are in the financial sector, including Real Estate Investment Trusts (REITS), whose businesses have been negatively affected by the Federal Reserve's recent series of rate hikes, which it only just reversed at the end of July 2019. Of the five remaining firms, three are in the manufacturing sector, and there are one each from the insurance industry and the media sector. Given the severe downturn in the global automotive industry, we would anticipate higher numbers of dividend cuts in the manufacturing sector in months ahead.

Finally, sharp-eyed readers will note the total dividend cuts for our sample adds up to 33, while S&P's count of dividend cuts during 2019-Q3 only totals 29. This discrepancy reflects differences among our sources for how they count and report dividend cuts.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 2 October 2019.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 1 October 2019.

Wall Street Journal. Dividend Declarations. [Online Database when searched on the Interent Archive]. Accessed 1 October 2019.