Unexpectedly Intriguing!
02 March 2023
Bull and bear in front of the Frankfurt Stock Exchange by the sculptor Reinhard Dachlauer

Great stories have memorable beginnings. Some are understated ("In the beginning..."). Some are cliche ("Once upon a time..."). One, above all others, immediately sets up a conflict for the pages ahead ("It was the best of times, it was the worst of times...").

Care to guess which one of these introduces the story of dividends in the U.S. stock market in February 2023?

Perhaps historians looking backward with the benefit of hindsight will be able to make easy sense of things. We, living in the middle of it, have no such frame of reference. Our role is to tell you what we saw, shortly after we saw it. What we saw in February 2023's dividend actions looks like the best of times and it looks like the worse of times.

Let's go straight to the our chart tracking the number of U.S. publicly trading companies that announced they would either increase or decrease their dividends each month. The chart spans the modern period from January 2004 through February 2023. As you're about to see, more companies increased their dividends in February 2023 than in any of the preceding 229 months. Meanwhile, the number of companies paying lower dividends to their shareholders increased to the third highest level its been during this period. Only the months containing the delayed fallout from 2020's Coronavirus Recession saw higher numbers in this era.

Number of Public U.S. Firms Increasing or Decreasing Their Dividends Each Month, January 2004 through February 2023

As a general rule, when the number of dividend rises is high, the number of dividend reductions is low, and vice-versa. It is very unusual to have both spike upward at the same time. That's even true during the Coronavirus Recession, when the U.S. economy swung sharply from growth to contraction as government-mandated pandemic lockdowns took their toll.

But that's not the case for February 2023. Record high dividend increases for the month are occurring at the same time as dividend reductions doubled the threshold signaling recessionary conditions.

Pointing out these extremes doesn't do them justice. We can fully quantify them. The following table presents February 2023's dividend metadata. Both favorable and unfavorable dividend changes are up substantially, both Month-over-Month (MoM) and Year-Over-Year (YoY):

Dividend Changes in February 2023
   Feb-2023  Jan-2023    MoM  Feb-2022    YoY
Total Declarations 5,186 3,127 2,059 ↑ 4,656 530 ↑
Favorable 539 221 318 ↑ 456 83 ↑
- Increases 424 168 256 ↑ 362 62 ↑
- Special/Extra 111 48 63 ↑ 84 27 ↑
- Resumed 4 5 -1 ↓ 10 -6 ↓
Unfavorable 100 65 35 ↑ 25 75 ↑
- Decreases 100 65 35 ↑ 25 75 ↑
- Omitted/Passed 0 0 0 ↔ 0 0 ↔

Only the number of dividend omissions seems out of place. Historically, the number of companies announcing they are suspending (or omitting) their dividend payments follows the same trends as companies that decrease their dividend payments. But, Standard and Poor hasn't reported any dividend omissions since June 2021. We suspect they are being grouped under the category of dividend decreases, which could be appropriate since both count as unfavorable changes for shareholders, but isn't for tracking over time because they are very different mechanisms for reducing dividend payouts to shareholders.

Our sampling of dividend decreases captures 20 of the 100 reported dividend reductions. Once again, the reductions are predominantly concentrated in the U.S. oil and gas sector, particularly among firms that pay variable dividends to their shareholding owners. These firms have made frequent appearances in recent months, coinciding with the ~35% decline in the price of crude oil from early June through December 2022. That makes sense because our sampling includes a larger number of firms in this category that pay quarterly dividends, which are still catching up to 2022's fall in oil prices.

Here's the list for our sampling, where we also find industrial representation from the apparel, mining, chemicals, manufacturing, real estate, shipping and technology sectors of the economy.

We cannot emphasize enough how unusual it is for there to be 100 dividend reductions recorded in a single month. That's something that didn't even happen during the 2008-09 Great Recession. It's rare to see this level of unfavorable dividends, combining both dividend decreases and omissions, take place outside of recessions. That it is happening at the same time dividend increases are reaching such a high level is exceptionally unusual.

And so, we come back to where we started, with a bull market and a bear market all at once. It is the best of times. It is the worst of times. The U.S. stock market has hit peak-Dickens.


Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 1 March 2023.

Image Credit: Wikimedia Commons. Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).


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