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Analyst’s update (June 4, 2023): We’ve updated the article to remove both Ready Capital and FS KKR Capital from the sampling of firms reporting reduced dividends. Ready Capital is paying $0.14 to the new “Broadmark” shareholders and $0.40 to original shareholders (no decreased dividend), where the reporting source only caught the “Broadmark” portion of the dividend reporting. Meanwhile, the reporting source for FS KKR Capital likewise lacked clarity for its May 2023 dividend declarations.
According to Standard & Poor’s, May 2023 showed signs of a rebound for the dividend-paying companies of the U.S. stock market.
The number of firms increasing their dividends was up from last month, while the number of dividend-paying firms was down. Normally, that combination represents a positive scenario for investors.
But there’s a problem when we get to the numbers. We regularly sample dividend declarations each month, making a point of tracking the number of unfavorable dividend actions we find among all the month’s announcements. We counted no fewer than 37 announcements of reduced, cut, or suspended dividends.
S&P only reported twenty such unfavorable changes for dividend payers in May 2023.
That makes May 2023 a very rare occurrence where our sample of dividend reductions is larger than the total reported by S&P. We’ll dig more into the sampling later, but for now, here’s the big picture showing where Standard & Poor’s data on dividend increases and decreases for May 2023 fits as the latest data in what they’ve reported each month since January 2004:
Number of Public U.S. Firms Increasing or Decreasing Their Dividends Each Month (Political Calculations)
The following table presents S&P’s dividend metadata for May 2023, summarizing how the month’s dividend data compares in both Month-over-Month (MoM) and Year-over-Year (YoY) terms with previously reported data:
| Dividend Changes in May 2023 | |||||
|---|---|---|---|---|---|
| May-2023 | Apr-2023 | MoM | May-2022 | YoY | |
| Total Declarations | 4,093 | 3,169 | 924 ↑ | 4,041 | 52 ↑ |
| Favorable | 230 | 130 | 100 ↑ | 258 | -28 ↓ |
| – Increases | 140 | 91 | 49 ↑ | 156 | -16 ↓ |
| – Special/Extra | 87 | 39 | 48 ↑ | 85 | 2 ↑ |
| – Resumed | 3 | 0 | 3 ↑ | 17 | -14 ↓ |
| Unfavorable | 20 | 30 | -10 ↓ | 9 | 11 ↑ |
| – Decreases | 20 | 30 | -10 ↓ | 9 | 11 ↑ |
| – Omitted/Passed | 0 | 0 | 0 ↔ | 0 | 0 ↔ |
Overall, S&P’s dividend data is up month-over-month, and down year-over-year.
As noted, our sampling of dividend changes tallied 35 unfavorable actions during May 2023. Fourteen of these reductions or omissions are attributable to firms that pay variable dividends in the oil and gas sector, which we’ll take a deeper look at later this month.
Just as significantly, we counted 6 dividend reducing firms in the financial services sector, 2 in the real estate industry, and 2 banks. Together, that’s 10 firms from the sectors of the economy most sensitive to interest rate hikes that reduced their dividends.
The remaining firms whose business outlooks were distressed enough to prompt them to cut their dividends include three firms each in the consumer goods or shipping industries and two firms each in the chemical and manufacturing industries. One media company acted to cut its dividend to round out the total for the month in the sample. Here is the list – clicking the links for the firm’s names will take you to our source indicating the reduced or omitted dividend for it:
The firm marked with an asterisk in this listing, Big Lots (NYSE:BIG), suspended (or omitted) its dividend during May 2023.
We’ve previously confirmed that S&P’s dividend statistics have been missing firms that have announced they are suspending will omit paying their dividends. In fact, they haven’t reported any since June 2021. We had thought they were grouping them with their count of dividend decreases, but now we’re curious how they’re doing their counting for both decreases and omissions. That’s become an unanswered question.
References
Standard & Poor’s. S&P Market Attributes Web File. [Excel Spreadsheet]. 1 June 2023.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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