wall street street signwall street street sign

Dividend growth on U.S. companies’ common stock has slowed during Q3 2022, as companies face economic uncertainty due to higher interest rates and inflation, according to S&P Dow Jones Indices.

Q3 U.S. common dividend increases were $19.1B, down 0.9% from $19.3B in the prior quarter and down 14% from $22.2B in the year-ago quarter.

“Dividend increases continue at record levels. However, the strength of the increases has declined, as concerns over interest rates, inflation and slowing consumer spending have made companies more measured and cautious in their approach to dividend increases,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Indicated net changes (increases less decreases) for U.S. domestic stocks rose $17.7B during Q3 2022, vs. $17.6B in Q2 and $20.9B in Q3 2021,

For the 12-month period ended September 2022, the net dividend rate increased $71.5B vs. $61.4B in the 12-month period ended September 2021.

Within the S&P 500, Q3 cash dividends set a record payment, rising 8.5% Y/Y. In Q4, they’re expected to reach a new record. For the full year, dividends are expected to rise 10% over 2021’s actual cash payment.

Stock buybacks, which set a record at $281B in Q1 2022, fell to $220B in Q2, with both financials and health care issues trimming their expenditures. Buyback activity is expected to increase in H2 2022 as companies accelerate their purchases to avoid the new buyback tax set to start in 2023, S&P Dow Jones Indices said.

The Federal Reserve’s stress test for the country’s largest banks affect the size of their dividends and stock buyback programs. In June, JPMorgan (JPM) kept its dividend unchanged, while Morgan Stanley (MS), and Bank of America (BAC) increased their payouts to shareholders; Citi (C) also kept its dividend unchanged after its stress buffer was increased.

Photo by Sophie Backes on Unsplash

Leave a Reply

Your email address will not be published. Required fields are marked *