The third quarter of 2024 was both less positive and more negative for dividend paying companies than the second quarter of the year.
That seems like double-edged way of saying the quarter was worse for the U.S. stock market's dividend payers, but to just simply say it was worse would miss communicating how it was worse, which was less bad than it had the potential to be.
Maybe the best way to cut through the noise is with a picture. Our first chart presents the positives for dividend payers as the number who declared they would increase their dividends and the negatives as the number of firms who announced they would decrease them. The chart shows both increases and decreases for each of the last five quarters, spanning 2023-Q3 through the just completed 2024-Q3.
The chart shows the number of firms increasing dividends in 2024-Q3 fell with respect to the previous quarter, which is less positive. Likewise, the number of dividends decreases is more negative, as more firms announced they were reducing their dividend payouts.
At this point, these are relatively small negative changes and perhaps not much to be concerned about just yet. There is after all the bright spot of the year-over-year comparison, where things look better for both counts.
The most distressed sector in 2024-Q3 was the oil and gas industry, which outnumbered firms in other sectors. That makes sense with oil prices falling during much of the quarter as global demand has waned. That trend lowers the revenues and earnings for the firms in this sector, with dividends following suit for the companies that pay variable or hybrid dividends. Even so, with 14 dividend decreases announced by firms within the oil and gas sector, the total of these firms falls below the threshold that signals recessionary conditions within the U.S. are impacting it.
Switching to monthly data, we find September 2024 was net positive for U.S. dividend paying companies compared, with the number of favorable changes outweighing the number of negative changes. The following table summarizes Standard and Poor's dividend metadata for September 2024, comparing it both Month-over-Month (MoM) and Year-Over-Year (YoY) with previously reported data:
| Dividend Changes in September 2024 | |||||
|---|---|---|---|---|---|
| Sep-2024 | Aug-2024 | MoM | Sep-2023 | YoY | |
| Total Declarations | 4,603 | 4,105 | 498 ▲ | 4,408 | 195 ▲ |
| Favorable | 136 | 188 | -52 ▼ | 99 | 37 ▲ |
| - Increases | 89 | 119 | -30 ▼ | 62 | 27 ▲ |
| - Special/Extra | 47 | 67 | -20 ▼ | 36 | 11 ▲ |
| - Resumed | 0 | 2 | -2 ▼ | 1 | -1 ▼ |
| Unfavorable | 9 | 13 | -4 ▼ | 22 | -13 ▼ |
| - Decreases | 9 | 13 | -4 ▼ | 22 | -13 ▼ |
| - Omitted/Passed | 0 | 0 | 0 ◀▶ | 0 | 0 ◀▶ |
Because of the seasonal pattern for dividends, in which the number of dividend actions typically decreases in the final month of the third quarter, the best comparison is the year-over-year data. Compared with September 2023, there were 37 more favorable changes announced in September 2024 and 13 fewer unfavorable changes, for a net positive of 50.
The final chart we'll present is the monthly number of dividend increases and decreases, which covers January 2004 through September 2024.
Three months ago, we noted there was potentially a bearish storm cloud developing in the U.S. stock market. Compared to 2024-Q2, it's started to arrive but may not be as bearish as its potential suggested. That's good news, and we'll take that whenever we can find it.
References
Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 October 2024.
Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and a bear looking at each other, with one of them asking 'What was that all about?'"
Labels: dividends
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