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S&P Dow Jones released its third quarter 2022 guidance on dividend payment activities of S&P 500 companies on Tuesday.
The firm revealed that the 2022 net indicated dividend rate change increased by $17.7 billion in Q3, compared to $17.6 billion in Q2 and $20.9 billion in Q3 2021.
S&P Dow Jones Indices’ analysts said, “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,” they added.
For the 12 months ending September this year, U.S. common dividend increases were $86.7 billion, up 20.7% from last year’s $71.8 billion, while decreases were up 44.9% to $15.2 billion during the period, compared to $10.5 billion in 2021.
In addition, the net indicated dividend gain in the 12 months ending September this year was $71.5 billion net, compared to $61.4 billion during the same period last year.
Looking ahead, they said Q4 appears set to slightly increase, while 2023 “appears set for another record payment.”
“The key question is by how much and the answer will depend on the state of the economy and corporate profits,” continued the analysts. “The uncertain forecast for 2023 dividend payments is also driven by several factors: high inflation, rising interest rates, and the consumer pull back, as more market practitioners on Wall Street are signaling a 2023 recession. Overall, it is clear that companies are currently protecting their dividends, even if it means reducing buybacks.”
