Unexpectedly Intriguing!
02 August 2016

One month after the number of U.S. companies declaring they would be cutting their dividends outnumbered the number of U.S. firms increasing their dividends - the first time that has happened since the Great Recession - the immediate situation for the private sector of the U.S. economy appears to have improved, confirming the development of bright spot for the economy.

According to Standard & Poor, the number of U.S. firms announcing they would increase their dividend payments to investors rose from 70 in June 2016 to 161 in July 2016. Meanwhile, the number of U.S. firms announcing they would decrease their cash dividend payments to their shareholders fell from 75 in June 2016 to 22 in July 2016. The following chart shows the number of U.S. firms that announced that they were either increasing or decreasing their dividends in each month since January 2004.

Number of Public U.S. Companies Increasing (Blue) or Decreasing (Red) Their Dividends, January 2004 through Present, January 2004 through July 2016

Looking at just the monthly number of dividend increases, we see a general downward trend since mid-2014, which has continued through July 2016.

Zooming in on the monthly number of dividend cuts, we see a general upward trend over that same period of time.

Monthly Number of Public U.S. Companies Announcing Dividend Cuts, January 2004 through July 2016

So while July 2016 represents an improvement in both figures, that improvement is occurring within the context of generally negative trends for both measures.

Going by our real-time sampling of dividend cuts during July 2016, we can confirm that the first quarter of 2016-Q3 is off to a much stronger start than the year ago quarter of 2015-Q3.

Cumulative Announced Dividend Cuts in U.S. by Day of Quarter, 2015Q3 vs 2016Q3, Snapshot 2016-07-29

Even though the last several days of July 2016 saw an uptick in the number of dividend cuts that was sufficient to lift the month into the zone indicating that recessionary conditions are present in the U.S. economy, it was never-the-less a marked improvement over the year ago quarter.

Or for that matter, the first two quarters of 2016.

Cumulative Announced Dividend Cuts in U.S. by Day of Quarter, 2016Q1 vs 2016Q2 vs 2016Q3, Snapshot 2016-07-29

Data Sources

Standard & Poor. Monthly Dividend Action Report. [Excel Spreadsheet]. Accessed 1 August 2016.

Seeking Alpha Market Currents Dividend News. [Online Database]. Accessed 1 August 2016.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 1 August 2016.


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