Unexpectedly Intriguing!
07 June 2017

May 2017 was easily the best May for U.S. stock market dividends since 2014. In terms of dividend cuts, the number of reductions rose month-over-month, but was reduced in the year-over-year measure. But what made the month was dividend increases and extra (or special) dividends, where both categories showed month-over-month and year-over-year increases.

Before we dive into the month's numbers, let's take a look at the number of increases and cuts recorded in each month since January 2004 in the following chart, which now shows a rising trend for dividend increases and a falling trend for dividend cuts.

Number of Public U.S. Companies Increasing or Decreasing Their Dividends, January 2004 through May 2017

Here is Standard and Poor's summary data for the U.S. stock market's dividends in May 2017:

  • Some 3,536 U.S. firms issued some kind of declaration of their dividend policy during May 2017, down from 4,017 in April 2017, and down slightly from 3,542 from the same month a year earlier.
  • Of those companies, 48 announced special dividend payments for their shareholders, up from 27 in April 2017 and also up from 37 in May 2016.
  • Dividend increases were likewise up in the month-over-month and year-over-year totals, with 190 recorded in May 2017, compared to 152 in April 2017 and 176 back in May 2016.
  • Three companies resumed paying dividends in May 2017, up from 2 that did so a month ago, and the same as did a year ago.
  • There were 18 dividend cuts announced in May 2017, up slightly from 14 in April 2017, but down from the 24 that were announced in May 2016.
  • If there was cause for concern during the month, it was to be found in the 10 firms that omitted dividends during May 2017, which was up from the 2 that took that action in April 2017, but down considerably from the 22 that did in May 2016.

Taking a closer look at the history of dividend cuts since January 2004, we find that May 2017 falls within the level where there are recessionary conditions present within the U.S. economy, but below the level where there is some degree of significant economic contraction.

Number of Public U.S. Companies Posting Decreasing Dividends, January 2004 through May 2017

Our real-time sampling of dividend cuts for May 2017 indicates that the month was rough on the oil & gas sector, where the impact of recent dips in the price of crude oil in both March 2017 and May 2017 may have shown up in May 2017's dividends for a number of monthly dividend payers in that industry.

Meanwhile, the finance sector accounted for the second most number of dividend cuts announced during the month by industry, but perhaps the most surprising was the elevated number of chemical companies, particularly those that produce agricultural fertilizer products, that announced dividend cuts during the month, which included Terra Nitrogen (NYSE: TNH), Mosaic (NYSE: MOS) and Ashland Global Holdings (NYSE: ASH).

Update: Welcome Bloomberg, Big Picture and RealClearMarkets' Off the Street fans! If you're interested in seeing more of the kind of analysis that we do here at Political Calculations, you can catch up with our latest post on the success (or lack thereof) for Philadelphia's controversial soda tax, which may have special meaning today for any readers hailing from Seattle who like sugary soft drinks!

Data Sources

Standard & Poor. Monthly Dividend Action Report. [Excel Spreadsheet]. Accessed 2 June 2017.

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