Over the past year, stock market dividends have consistently featured two major themes when their year-over-year changes are measured.
- A falling number of dividend decreases. This is a positive trend, suggesting growing strength among dividend-paying companies.
- A falling number of dividend increases. This is a negative trend that indicates growing weakness in the market.
These mixed signals have continued once again in February 2024. Here's our chart tracking the number of U.S. publicly trading companies that have either increased or decreased their dividends each month, spanning the last two decades.
So which is it? Well, if we use the year-over-year change in the number of firms declaring they will pay an extra, or special, dividend to their shareholding owners as a tiebreaker, we're going to have to come down on February 2024 being a negative month for dividend paying stocks. That's because this number fell in February 2024, which is an unfavorable change.
We've tallied the February 2024's dividend metadata in the follwing table, presenting both Month-over-Month (MoM) and Year-over-Year (YoY) changes:
| Dividend Changes in February 2024 | |||||
|---|---|---|---|---|---|
| Feb-2024 | Jan-2024 | MoM | Feb-2023 | YoY | |
| Total Declarations | 5,386 | 3,120 | 2,266 ▲ | 5,186 | 200 ▲ |
| Favorable | 396 | 200 | 196 ▲ | 539 | -143 ▼ |
| - Increases | 305 | 154 | 151 ▲ | 424 | -119 ▼ |
| - Special/Extra | 90 | 46 | 44 ▲ | 111 | -21 ▼ |
| - Resumed | 1 | 0 | 1 ▲ | 4 | -3 ▼ |
| Unfavorable | 21 | 15 | 6 ▲ | 100 | -79 ▼ |
| - Decreases | 21 | 15 | 6 ▲ | 100 | -79 ▼ |
| - Omitted/Passed | 0 | 0 | 0 ◀▶ | 0 | 0 ◀▶ |
Focusing on just dividend decreases reported during the month, our sampling of these declarations identified 15 of the 21 announced reductions. Here's the list:
- JBG SMITH Properties (REIT-Office) (Variable) (NYSE: JBGS)
- Sabine Royalty Trust (Variable) (NYSE: SBR)
- Chesapeake Granite Wash Trust (Fixed) (NYSE: CHKR)
- KKR Real Estate Finance Trust (REIT-Mortgage) (Variable) (NYSE: KREF)
- TPG Inc. (Fixed) (NASDAQ: TPG)
- Mesa Royalty Trust (Variable) (NYSE: MTR)
- Ares Commercial Real Estate (REIT-Mortgage) (Fixed) (NYSE: ACRE)
- International Flavors & Fragrances (Hybrid) ( NYSE: IFF)
- Pioneer Natural Resources (Fixed) (NYSE: PXD)
- Newmont (Fixed) (NYSE: NEM)
- Great Ajax (REIT-Mortgage) (Fixed) (NYSE: AJX)
- Cross Timbers Royalty Trust (Fixed) (NYSE: CRT)
- Big 5 Sporting Goods (Retail) (Variable) (NASDAQ: BGFV)
- JBG SMITH Properties (REIT-Office) (Fixed) (NYSE: JBGS)
- Sunstone Hotel (Lodging) (Fixed) (NYSE: SHO)
Five of February 2024's sampling are variable dividend paying firms from the oil and gas sector, whose number falls below the threshold of ten for these firms that would indicate distress in that industry. It is better described as consistent with the typical background noise we see in this sector that follows with the month-to-month volatility of oil prices.
Four of these firms are Real Estate Investment Trusts (REITs). This represents the ongoing fallout from the Federal Reserve's 2022-2023's interest rate hikes that is impacting this sector, which has mainly impacted mortgage REITs, but which is expanding to impact the commercial real estate sector.
Rounding out the sample, we find two firms from the financial services industry, one chemical producer, one mining firm, one lodging provider, and one retailer.
Before we close, we have one last observation. Starting in 2018, the month of February has marked the annual peak for announced dividend increases. Absent a major development, the 305 dividend increases recorded in February 2024 will almost certainly be the high water mark for the year.
References
Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. 1 March 2024.
Image Credit: Wikimedia Commons. Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).