Unexpectedly Intriguing!
September 25, 2014

Earlier this week, we indicated that we were about to get our first glimpse of the expected future for the S&P 500's quarterly dividends per share for the third quarter of 2015.

We now have it! Here's the snapshot of the amount of cash dividends expected to be paid in each quarter between the present and the 2015-Q3, according to the Chicago Board of Exchange's implied future dividends per share indicators:

S&P 500 Past and Expected Future Dividends per Share, 2013-Q1 through 2015-Q3

This chart mixes the historic data for the S&P 500's quarterly dividends per share recorded by Standard & Poor [Excel spreadsheet] from 2013-Q1 through 2014-Q2 with the expected future dividends recorded by the CBOE's dividend futures contracts.

But because of how the CBOE's dividend futures work, there's a mismatch between the two sources of data. Here, the dividend futures contracts run through the third Friday of the month ending the indicated calendar quarter, while the S&P data runs to the very end of month ending the indicated calendar quarter. That mismatch in terms results in discrepancies between the quarterly dividends reported by each source of data.

For most quarters, the discrepancies that result from that term mismatch is relatively small, but our readers should expect that the data indicated for the future quarters will be revised.

That's especially true for the almost completed quarter of 2014-Q3, where the value indicated in the chart by the CBOE's dividend futures represents the amount of cash dividends paid out by S&P 500 companies between the time the 2014-Q2 dividend futures contract expired and the just expired 2014-Q3 dividend futures contract. Because we're still in the period before official end of the calendar quarter used by S&P, that figure will very likely be revised.

Leaving aside changes in the actual expectations for the amount of dividends that will be paid in future quarters, we should also note that the biggest discrepancy between what the futures data indicates and what S&P will finally record the data to have been will occur in the data for the fourth quarter of the current year and the first quarter of the next one, with the typical adjustment being that the data for the fourth quarter of the current year will tend to be adjusted upward and the data for the first quarter of the next year will tend to be adjusted downward when S&P reports its figures.

Update 25 September 2014 11:41 AM EDT: Oh, by the way, in case anyone is wondering why stock prices are down so much and so seemingly unexpectedly this morning, these future expectations are why. We'll explain more next Monday, and then we'll go on vacation for a week....


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