Unexpectedly Intriguing!
September 6, 2017

August 2017 was something of a mixed month for dividend-paying stocks in the U.S. stock market. On the plus side, the number of U.S. firms announcing dividend increases was up and the number of firms announcing dividend cuts were down, both month over month and year over year, both of which are positive indications of the health of the private sector of the U.S. economy.

Number of Public U.S. Companies Increasing (Blue) or Decreasing (Red) Their Dividends, January 2004 through August 2017

Zooming in a little closer on the dividend cut portion of the bigger picture....

Monthly Number of Public U.S. Companies Announcing Dividend Cuts, 
January 2004 through August 2017

What makes the picture for the dividend-paying sector of the U.S. economy a mixed one is the sharp increase in the number of firms that omitted making dividend payments in August 2017, where the number of firms that did so spiked up to levels typically seen during periods of economic distress within the U.S. economy.

Monthly Number of Public U.S. Companies Omitting Dividends, 
January 2004 through August 2017

Together, the number of first that either omitted paying dividends or that announced dividend cuts suggests that the U.S. economy is above the threshold where some degree of economic contraction is taking place. Based on our real time sources for dividend declarations, that distress would appear to be primarily concentrated in the oil and gas sector, with the financial sector of the U.S. economy currently also being negatively impacted.

With that analsysis in mind, here are the dividend numbers for the month of August 2017:

  • 3,454 U.S. firms issued some kind of declaration regarding their dividends in August 2017, which is up from the 3,037 that did so in July 2017. Compared to a year ago however, the number of companies that declared their dividends was down from the 3,669 that were recorded in August 2016.
  • Just as in July 2017, 25 U.S. companies announced that they would pay a special or extra dividend payment in August 2017, which is down from 29 announcements of special dividend payments made in August 2016.
  • The number of dividend increases declined to 132 in August 2017 from the 161 that were announced in July 2017. The number of dividend increases was significantly up from the 110 that were announced in August 2016.
  • 16 U.S. firms announced that they were cutting their dividends in August 2017, falling from both the 23 that cut dividends in July 2017 and the 21 that cut their dividends in August 2016.
  • More significantly, 15 companies omitted paying their scheduled dividends in August 2017, up from 6 in July 2017 and also up year over year from the 7 that omitted paying dividends in August 2016.

Like dividend cut announcements, omitted dividends indicate that firms are experiencing financial distress, but unlike dividend cuts, announcements of omitted dividends are often missed in the automated screens that capture news of changes in corporate dividend policies, so we do not have great visibility into which firms have chosen to take this action.

Data Sources

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 September 2017.

Seeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 1 September 2017.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 1 September 2017.

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