Unexpectedly Intriguing!
June 15, 2010

Crystal Ball Earth In looking at the latest quarterly dividend futures data, we found what could well turn out to be a historical anomaly in the data if the future plays out as investors currently expect.

Looking ahead to 2011, we see the first quarter of 2011 as a peak in the cash dividends per share expected to be paid out, with a projected $6.16 per share currently expected to be paid out to investors, which is both greater than the preceding expected fourth quarter payout in 2010 and the following expected second quarter payout of 2011.

What makes this extremely unusual is that in the quarterly data we have recorded by S&P in their Index Earnings data spreadsheet going back to the first quarter of 1988, this would be the only time we've ever seen that pattern in the available historical data. (Note: We have trailing year dividend data going back much farther.)

The proof of that may be seen in our following chart, in which we're showing the quarterly dividend data for the S&P 500 going back to the first quarter of 1998, through the dividend futures data going through the second quarter of 2011 that we have available as of today:

S&P 500 Quarterly Dividends per Share, March 1998 through March 2010, with Futures Through June 2011

The usual pattern is to see dividends per share to peak in the fourth quarter of each year, as companies seek to pay out a larger share of the profits they earned during the previous year to their shareholders in the current tax year for individuals.

Meanwhile, during periods of recession, it's not unusual for the first quarter data to be greater than the following quarter, as companies trim dividend payments in hard times, but the first quarter will normally be less than the preceding fourth quarter.

So 2011 is shaping up to be unique. We wouldn't say the current period of disorder in the stock market, and by extension, the private sector of the U.S. economy, is set to end anytime soon.


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