Unexpectedly Intriguing!
January 5, 2016

In the end, it was close, but where U.S. companies announcing dividend cuts in 2015 are concerned, the first quarter of the year was ever so slightly worse than the final quarter of the year!

That's certainly clear from our cumulative announced dividend cuts by day of quarter chart, where we see that a late surge in 2015-Q4 nearly overtook the first quarter as being the worst of the year.

Cumulative Announced Dividend Cuts in U.S. by Day of Quarter in 2015, Q1 vs Q2 vs Q3 vs Q4

Our sharp-eyed readers will immediately recognize that this chart is considerably different from the version we last featured on 22 December 2015, when we recognized that dividend cuts in 2015-Q4 had reached levels that are consistent with some degree of contraction occurring within the U.S. economy, particularly for the data for the first and second quarters of 2015.

Over the holiday, we revised our counts of the number of dividend cuts announced during these first two quarters of 2015, reflecting a change in our methodology that we had adopted during the third quarter of the year. Before the revision, our counting for these quarters included the dividend cuts announced by a number of Exchange Traded Funds (ETFs), whose dividend cuts were in part driven by the dividend cuts announced by companies whose stocks they held, representing a kind of double-counting.

To compensate for that effect, we reviewed all the announced dividend cuts for these quarters to remove the cuts announced by the ETFs, with the results presented above.

With that having been done, we also went back into our two data sources (listed below) to tap all the dividend cut data available for the fourth quarter of 2014, so we could do a more complete comparison between that year-ago period with the just completed fourth quarter of 2015. Our results are visually presented below:

Cumulative Announced Dividend Cuts in U.S. by Day of Quarter, 2014-Q4 versus 2015-Q4

Here we find that the two quarters followed nearly identical tracks all the way up to the third week of December in each year. But 2015-Q4 took a turn for the worse, ending the year in contractionary territory.

What that means is that it is very likely that the GDP growth rate for 2015-Q4 is likely somewhat lower than both the 2.1% real growth rate that was recorded in 2014-Q4 and the 2.0% real growth rate just estimated for 2015-Q3.

Tomorrow, we'll hopefully be able to check in with Standard and Poor's count of the number of dividend cutting firms in the U.S. through the month of December, as that data wasn't yet available on 4 January 2015.

Data Sources

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 4 January 2016.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 4 January 2016.


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