Unexpectedly Intriguing!
02 October 2020

September 2020 continued the positive trend established in the two preceding months of July and August for dividend paying firms in the U.S. stock market.

Here is the dividend metadata for the month of September 2020:

  • A total of 3,598 U.S. firms declared dividends in September 2020, an increase of 370 over the 3,228 recorded in August 2020, but a decrease of 422 with respect to the number of dividend declarations issued recorded in September 2019.
  • Eighteen U.S. firms announced they would pay a special (or extra) dividend to their shareholders in September 2020, a decrease of one from the number recorded in August 2020 and six lower than what was recorded a year ago in September 2019.
  • 61 U.S. firms announced they would boost cash dividend payments to shareholders in September 2020, a decrease of 20 from the 81 recorded in August 2020, and a decrease of six from the 67 dividend rises declared back in September 2019. As a general rule, September represents the month most likely to record the lowest number of dividend rises of any month in any given year.
  • A total of 12 publicly traded companies cut their dividends in September 2020, a decline of 11 from the 23 recorded in August 2020 and also a decrease of 17 from the 29 recorded in September 2019.
  • 18 U.S. firms omitted paying their dividends in September 2020, an increase of seven over the number recorded in August 2020. That figure is also an increase of 10 over the total recorded in September 2019.

The following chart adds September 2020's number of dividend increases and decreases to the ongoing series of data reported by Standard and Poor since January 2004. Please click here to access a large version of the chart.

Number of Public U.S. Firms Increasing or Decreasing Their Dividends Each Month, January 2004 - September 2020

Three solid months make for a solid quarter for the U.S. stock market's dividend payers. We put together the following quick sums to compare the dividend metadata for the good quarter of 2020-Q3 with the worst-ever quarter that immediately preceded it for comparison:

  • In 2020-Q3, publicly-traded U.S. firms issued 10,049 declarations about their dividend policies. That total was 228 fewer than the 10,277 declarations issued in 2020-Q2.
  • 62 firms announced they would pay an extra, or special, dividend to their shareholders during 2020-Q3. By comparison, just 46 firms found enough cash to make it worthwhile enough to make an extra dividend payment to their shareholding investors in 2020-Q2.
  • A total of 212 companies announced they would increase their dividends during 2020-Q3, up 20 from the 192 that did in the preceding quarter of 2020-Q2.
  • 35 firms announced they would resume paying dividends after having previously suspended them, an increase of 27 over the total of 8 that did during 2020-Q2.
  • S&P recorded some 62 firms announcing dividend cuts in 2020-Q3. That number was down by 243 from the 305 firms that declared they would act to reduce their dividends in 2020-Q2.
  • Meanwhile, 40 firms announced they would suspend, or omit, paying their dividends during 2020-Q3, which is 294 fewer than the 334 that put their dividends on hold in the preceding quarter.

With a quarter-over-quarter improvements like these, it was no wonder that the pace of dividend cuts during 2020-Q3 fell well below the threshold signifying some degree of contraction in the U.S. economy. That's not to say that recessionary conditions were not present, but rather that the U.S. economy likely expanded during the third quarter of 2020. That relative health may be seen in our chart showing the cumulative number of dividend cuts by day of quarter for 2020-Q3, which we've compared with the third quarters of 2017, 2018, and 2019.

Cumulative Dividend Cuts and Supsensions in U.S. by Day of Quarter, 2017-Q3 vs 2018-Q3 vs 2019-Q3 vs 2020-Q3, Snapshot on 2020-09-30

2020-Q3 saw more dividend cuts than each of the other historical quarters shown in the chart, but mainly in the first half. After the first half, the pace of dividend cuts slowed considerably, which corresponds with the U.S. economy gaining traction during the second half of the quarter.

Meanwhile, with S&P reporting just 12 dividend cuts in September 2020, our sample of dividend cutting firms is fairly skimpy with half that number turning up in our near real-time sources for dividend declarations. Here is that very, very short list:

There's an interesting category of firms we haven't had to deal with much in the past that have begun showing up in our sampling. This category consists of firms that either suspended or omitted paying their dividends, but which have since resumed paying dividends to their shareholders, but at reduced levels compared to what they were paying previously. We'll take a closer look at the firms fitting within this definition on their own in upcoming weeks.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 30 September 2020.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database].

Wall Street Journal. Dividend Declarations. [Online Database when searched on the Internet Archive].

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