A month has passed since our previous look at the expected future quarterly dividends of the S&P 500 (Index: SPX) in 2025.
Since that date in mid-December 2024, investors expectations of how many rate cuts there will be during 2025 have see-sawed between zero and two, which goes a long way to explaining why the value of the S&P 500 has traded in a range that's gone as low as 5,827.04 on 10 January 2025 and as high as 6,049.24 as investors expectations of how many interest rate cuts there will be during 2025 have changed. The low figure corresponds to "fewer" rate cuts, with just one in the second quarter of the year, the high figure corresponds to the expectation of "more" rate cuts, with the odds now building for a second rate cut in the fourth quarter of 2025. The high figure also happens to be the closing value of the S&P 500 on Tuesday, 21 January 2025.
But expectations of when the Federal Reserve might change interest rates is not the only driver of stock prices. While those changing expectations affect how far forward in time investors set their focus as they set current day stock prices, expectations for the dividends that will be paid out in the future quarters of 2025 play just as important a role. The following animated chart confirms that outlook has brightened over the past month. If you're reading this article on a site that republishes our RSS news feed, you may need to click through to our site to see the animation.
How changes in the outlook for dividends at specific points of time in the future affects stock prices is described by this math.
More About Dividend Futures Data
For this series, we have been taking a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.
Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2025-Q1 began on Saturday, 21 December 2024 and will end on Friday, 21 March 2025.
That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.
Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.
Labels: dividends, forecasting
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Closing values for previous trading day.
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