Unexpectedly Intriguing!
July 10, 2018

Both the month of June 2018 and the second quarter of 2018 have come and gone, and for dividend paying stocks, it would appear to have been a very good month that hid one big negative surprise: an unexpectedly large number of dividend cuts.

We say unexpectedly because our two near-real time sources of dividend cut declarations signaled a total of nine U.S. firms that made dividend cut announcements during June 2018, where Standard and Poor's Divstat report (Excel spreadsheet) counted 46.

At the same time, we can describe the month as otherwise being very good, because with 92 firms increasing their dividends, it was the best June in the last four years.

Number of Public U.S. Companies Increasing or Decreasing Dividends in Each Month from 
January 2004 through June 2018

We suspect that the difference between our two sources for dividend declarations and S&P's total U.S. stock market report may be potentially attributable to a number of Exchange Traded Funds (ETFs) and Preferred Stocks, and possibly also the stocks of foreign-based firms that are traded on U.S. stock exchanges, that we purposefully exclude from our monthly count of dividend cuts, but we're afraid that we just don't have the visibility into Standard & Poor's total stock market dividend report to confirm if that is indeed the case. Since this is the biggest discrepancy that we've seen between our real-time sampling and the total figure reported by S&P, we'll be investigating further and will report what we find out.

Meanwhile, let's get to the dividend metadata for both June 2018 and for 2018-Q2.

  • 4,079 firms declared dividends in June 2018, up both from the 3,648 that announced dividends in May 2018 and also from the 3,778 firms that declared dividends a year earlier in June 2017.
  • Just 25 firms announced that they would pay an extra, or special" dividend to their shareholders in June 2018. This figure is down from the 43 extra dividends that were announced in May 2018, but is consistent with the 26 special dividend payements that were declared in June 2017.
  • As we mentioned earlier, 92 U.S. firms raised their dividends in June 2018, which is down from the 182 that did in May 2018, but up from the 73 that did in June 2017. For 2018-Q2, there were a total of 463 dividend increases, which is the highest total for the second quarter in the years since 2014, which saw 471 dividend hikes.
  • The number of dividend cuts announced in June 2018 was unexpectedly high in June 2018 with 42 reductions being declared, which was up significantly over the 23 that had been announced in May 2018 and also the 21 that had been announced in June 2017. Dividend cut announcements in the second quarter of 2018 totaled 81, which is up from the 53 dividend cuts that occurred in 2017-Q2, but is down from the 123 cuts recorded in 2016-Q2.
  • There were just 3 firms that omitted paying dividends during June 2018, down from the 4 that took similar inaction in May 2018, and also down more significantly from the 7 that declined to pay dividends to their shareholders in June 2017.

And that was the month that was!

Data Sources

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 2 July 2018.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 2 July 2018.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 2 July 2018.

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