Unexpectedly Intriguing!
02 August 2023
Zoom-in of 'Question Mark' adjacent to Herbig-Haro 45/47 (NIRCam Image) by Webb Telescope via NASA - https://webbtelescope.org/contents/media/images/2023/131/01H53089T1FMZZN48VD4Z73FRC

July 2023's dividends started off the third quarter of 2023 the way June 2023's dividends ended the second quarter. Unimpressively.

They're also raising more questions than they answer. It's like using the Webb Telescope to peer at distant galaxies and zooming in to find a question mark flagrantly lurking among them.

It's not the number of dividend decreases that makes it that way. While more U.S. firms announced reduced dividend payouts for their shareholders than in the previous month, the overall number remains well below the threshold that signals recessionary conditions are clearly afoot in the U.S. economy.

Instead, it's the number of firms that are announcing dividend increases that is indicating things aren't quite as good as the rising trend for stock prices suggests. Or rather, it's the absence of more dividend hikes being announced that's signaling things aren't quite alright for the publicly traded firms that make up the U.S. stock market.

You can see what we mean in the following chart, which shows all the monthly data Standard & Poor has for dividend increases and decreases going back to January 2004. July 2023's number of dividend increases is at a level that has previously been associated with either distress or recession affecting the companies that make up the U.S. stock market.

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

The following table presents S&P's dividend metadata for July 2023, summarizing how the month's dividend data compares in both Month-over-Month (MoM) and Year-Over-Year (YoY) terms with previously reported data. The YoY data is where the notable decline in the number of dividend increases stands out in this month's data:

Dividend Changes in July 2023
   Jul-2023  Jun-2023    MoM  Jul-2022    YoY
Total Declarations 3,951 4,904 -953 3,451 500
Favorable 131 100 31 188 -57
- Increases 92 58 34 145 -53
- Special/Extra 34 41 -7 42 -8
- Resumed 5 1 4 1 4
Unfavorable 23 15 8 35 -12
- Decreases 23 15 8 35 -12
- Omitted/Passed 0 0 0 ◀▶ 0 0 ◀▶

Our sampling of July 2023's unfavorable dividend actions includes 14 of the 23 announced reductions, with the oil and gas industry representing the highest share of any industrial sector for the month. The number of these firms however falls within the background noise range we expect for the industry given both how the price of oil has changed in recent months and that most of these firms pay variable dividends. Here's the short list - clicking the links for the firm's names will take you to our source indicating the reduced or omitted dividend for it:

Of these firms, we suspect but haven't confirmed that BorgWarner's dividend reduction may be related to its recent spinoff of Phinia (NYSE: PHIN) as a separate company. Or rather, it's not evident from the company's dividend declaration if that's indeed the case, while Phinia itself hasn't yet indicated if it will pay a dividend.


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

Image credit: Zoom-in of 'Question Mark' adjacent to Herbig-Haro 45/47 (NIRCam Image) by Webb Telescope via NASA. Public Domain.

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