January 2024 was a lackluster one for the dividend paying firms of the U.S. stock market. Starting with the bad news, the number of favorable changes for dividends was down both month-over-month and year-over-year and the number of unfavorable changes were up month-over-month.
The good news is that the number of unfavorable changes in January 2024 was down significantly year-over-year. That improvement is largely an outcome of 2023 having been a better overall year for dividend paying firms than 2022 had been.
Perhaps the best evidence for how lackluster the month was can be found in the numbers of dividend winners and losers. The number of firms announcing dividend increases rose month-over-month, but so did the number of firms announcing dividend cuts. Year-over-year, the number of dividend rises fell and so did the number of dividend decreases.
The following chart presents 20 years worth of monthly dividend increases and decreases, as reported by Standard & Poor for each month from January 2004 through January 2024.
Meanwhile, the dividend metadata for January 2024 is provided in the following table, which also shows how all the indicated stats have changed since last month and since January 2023.
| Dividend Changes in January 2024 | |||||
|---|---|---|---|---|---|
| Jan-2024 | Dec-2023 | MoM | Jan-2023 | YoY | |
| Total Declarations | 3,120 | 5,405 | -2,285 ▼ | 3,127 | -7 ▼ |
| Favorable | 200 | 239 | -39 ▼ | 221 | -21 ▼ |
| - Increases | 154 | 121 | 33 ▲ | 168 | -14 ▼ |
| - Special/Extra | 46 | 118 | -72 ▼ | 48 | -2 ▼ |
| - Resumed | 0 | 0 | 0 ◀▶ | 5 | -5 ▼ |
| Unfavorable | 15 | 8 | 7 ▲ | 65 | -50 ▼ |
| - Decreases | 15 | 8 | 7 ▲ | 65 | -50 ▼ |
| - Omitted/Passed | 0 | 0 | 0 ◀▶ | 0 | 0 ◀▶ |
Our sampling of dividend decrease announcements covers eight of the reported fifteen dividend reductions for January 2024. Three of the eight dividend reducing firms are oil and gas sector companies that pay variable dividends, where this total is well below the threshold that indicates an elevated level distress for that industry and falls within its typical background noise. Two of the announced dividend cuts are for banks, pointing to ongoing trouble for regional banks following 2023's bank failures. The remaining firms in our January 2024 sample include firms in the healthcare, materials, and real estate sector. The latter of these is an office-REIT (real estate investment trust), which represents continuing difficulties for the commercial portion of the real estate industry as we enter 2024. Here is the short list of dividend decreasing firms, clicking the name of the company will take you to the news source indicating the negative dividend change for shareholders:
Our sample of November 2023's dividend declarations includes 12 of the 15 announced unfavorable changes. Here's the list for the month:
- Walgreens Boots Alliance (Fixed) (NASDAQ: WBA)
- Sabine Royalty Trust (Variable) (NYSE: SBR)
- Office Properties Income Trust (REIT-Office) (Fixed) (NASDAQ: OPI)
- Permian Basin Royalty Trust (Variable) (NYSE: PBT)
- VOC Energy Trust (Variable) (NYSE: VOC)
- Mountain Commerce Bancshares (Fixed) (OTC: MCBI)
- Southern Copper (Fixed) (NYSE: SCCO)
- NY Community Bancorp (Fixed) (NYSE: NYCB)
The industries that recorded dividend reductions in January are the ones to pay attention to during the first half of 2024. The banking industry in particular stands to benefit from interest rate cuts that are expected later in the year, but the longer the Federal Reserve puts off cutting rates, the more trouble it may be for this sector of the economy. Not to mention other industries whose positive business outlook relies in any way on interest rates coming down substantially.
References
Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 1 February 2024.
Image credit: Cash Dividends by Nick Youngson on Picpedia.org. Creative Commons CC-BY-SA 3.0. Alpha Stock Images.