In the last several weeks, Wall Street's "fear gauge" has been getting quite a workout. That's because the "Big Tech" stocks whose growth powered the U.S. stock market to record highs in the first half of 2024 are now getting whacked. Investors have been selling these growth stocks off, pocketing their gains and often using the proceeds to buy up value stocks in their place.
In doing that, they're just as often exchanging shares of stocks that don't pay much in the way of dividends with the shares of companies that do. Given the recent market environment, that makes sense. Rather than losing money on stocks that have soared in recent months but now seem to have passed their peaks, wouldn't you rather invest in companies that send you nice dividend checks in the mail?
According to Standard & Poor, there were 3,882 publicly-traded firms in the U.S. stock market that announced during July 2024 they would be paying dividends to their shareholding owners. Of these, 116 announced they would pay more dividends than they have previously, while only five announced they would be decreasing their cash dividend payouts.
Those are good numbers compared to last month and also to the dividend numbers from July 2023. The following table tallies up the number of dividend declarations, announced increases, decreases, resumptions and special (or extra) dividend payments for July 2024 and shows how they changed from June 2024 and from July 2023.
| Dividend Changes in July 2024 | |||||
|---|---|---|---|---|---|
| Jul-2024 | Jun-2024 | MoM | Jul-2023 | YoY | |
| Total Declarations | 3,882 | 5,293 | -1,411 ▼ | 3,951 | -69 ▼ |
| Favorable | 156 | 113 | 43 ▲ | 131 | 25 ▲ |
| - Increases | 116 | 74 | 42 ▲ | 92 | 24 ▲ |
| - Special/Extra | 39 | 39 | 0 ◀▶ | 34 | 5 ▲ |
| - Resumed | 1 | 0 | 1 ▲ | 5 | -4 ▼ |
| Unfavorable | 5 | 4 | 1 ▲ | 23 | -18 ▼ |
| - Decreases | 5 | 4 | 1 ▲ | 23 | -18 ▼ |
| - Omitted/Passed | 0 | 0 | 0 ◀▶ | 0 | 0 ◀▶ |
July 2024's magic dividend number is seven. That's the positive difference between the total number of favorable dividend changes (25) and the number of unfavorable changes (18) announced during the month.
The following chart visualizes the monthly counts of dividend increases and decreases from January 2004 through July 2024.
Overall, we find the year-over-year trend for dividend rises is positive, seeing both month-over-month and year-over-year increases. The same is true of dividend decreases, where we find fewer such unfavorable changes being recorded in July 2024 than in both the previous month and what was recorded during the same month a year earlier.
The big question remains is how long might that positive trend continue? At some point, falling stock prices can portend a more negative outlook for dividends, which means even the value stocks may fall in value. Perhaps the most comforting thought is that compared to growth stocks, the amount they might fall given current market conditions is less than what the growth stocks will experience.
Losing less money while getting dividend checks in the mail is not a bad investing choice in that scenario.
References
Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 August 2024.
Image credit: The Birmingham Age-Herald. (Birmingham, Ala.), 1 July 1920. Chronicling America: Historic American Newspapers. Lib. of Congress. [Online Database].