Unexpectedly Intriguing!
06 March 2018

When it comes to the number of dividend increases declared during a single month, the U.S. stock market just recorded its best February ever.

Number of Public U.S. Companies Increasing or Decreasing Their Dividends, Month of February, 2004 through 2018

As an important caveat, "best February ever" refers to a data series that only extends back to January 2004, where there are only 15 Februaries to consider.

Still, what makes the month more remarkable is that it also posted the third highest monthly total of declared dividend raises that have been recorded in the 170 months for which we do have this kind of data!

Number of Public U.S. Companies Increasing or Decreasing Their Dividends,January 2004 through February 2018

Let's get to the dividend numbers for February 2018:

  • 3,493 U.S. firms declared dividends during the shortest month of 2018, up from the 2,734 that did in January 2018 and also up from the 3,359 that declared dividends a year earlier in February 2017.
  • 38 companies announced that they would pay an extra, or special, dividend payment to their shareholders in February 2018, down from 51 last month, but up from the 35 that did in the same month a year ago.
  • We've touched on February 2018 being a record setting month already, but to put numbers to it, there were 322 U.S. companies that announced that they would increase their dividends, which is up from the 318 that boosted their dividends in January 2018 and up significantly from the 287 that hiked their dividends back in February 2017.
  • The number of U.S. firms announcing that they would be reducing their dividends dropped to 20 in February 2018, which is down from the 36 dividend cuts declared a month earlier and also down from the 35 dividend cutters reported in February 2017.
  • There were 9 U.S. firms omitting to pay dividends for the month, which is up from the 1 firm that declined to pay dividends in Janaury 2018 and also up from the 4 companies that omitted paying dividends to their shareholders back in February 2017.

The increase in companies omitting their dividends is interesting, so we tapped the limited sample of dividend declarations recorded by Seeking Alpha and the Wall Street Journal for February to try to get more insight into what kinds of firms are passing on paying dividends to shareholders. We found just one report in the sample, for Frontier Communications (NASDAQ: FTR), who reported after the end of trading on Tuesday, 27 February 2018 that they would suspend paying their dividend to use the $250 million they would otherwise have paid out to reduce their corporate debt.

Just for fun, here's what happened to the company's stock price the next day....

Google Finance: Stock Price of Frontier Communications, 27 February 2018 through 28 February 2018

It's not often you get to see a company whack 24% off its market capitalization with a single action. It's a painful thing, which is, of course, why company CEOs and boards of directors avoid taking that step unless the business is experiencing a significant level of distress. Back in December 2017, both Pacific Gas & Electric (NYSE: PCG) and Edison International (NYSE: EIX) suspended their dividends because both utilities expect to have to pay large legal settlements related to damage caused by California's wildfires last fall. Both companies saw their stock prices plunge by similar percentages as Frontier Communications in their respective aftermaths.

Even in an otherwise strong market, there are often stories like these to help keep investors grounded. If they pay attention.

Data Sources

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 March 2018.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 4 March 2018.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 4 March 2018.


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